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Administrative Conference 

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Recommendations and Reports 





JANUARY I, 1973-JUNE 30, 1974 

2120 L Street, N.W., Suite 500 - Washinston, D.C. 20037 

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The Administrative Conference of the United States is a perma- 
nent, independent Federal agency established in 1964 by the 
Administrative Conference Act, 5 U.S.C. §§ 571-576, and acti- 
vated in January 1968. It is the successor of two temporary 
Administrative Conferences, established by President Eisenhower 
in 1953 and by President Kennedy in 1961. Its mission is to 
monitor all aspects of the administrative process in all of the 
executive and independent agencies ; to identify and analyze the 
causes of administrative inefficiency, delay and unfairness; to 
recommend to the agencies, the President, the Congress and the 
Judicial Conference of the United States specific means of im- 
provement; and to furnish, on agency request, assistance and 
advice on matters of administrative procedure. 

The chief executive of the Conference is a full-time Chairman, 
appointed by the President with Senate confirmation for a five- 
year term. Its Council consists of the Chairman and ten members 
appointed by the President for three-year terms, drawn from 
Federal agencies and from private life. The 91-member Assem- 
bly of the Conference consists of the Council, 44 high-level repre- 
sentatives designated by 36 major departments and agencies of 
the Federal Government, and 36 distinguished private citizens — 
practicing lawyers, academicians, state officials and others — who 
are specially knowledgeable in the field of administrative 

The Assembly conducts its business much like a legislative 
body, in Plenary Sessions that convene twice a year. The pro- 
posals to be considered at these sessions are generally developed 
by standing committees, which use the personnel resources of the 
Chairman's office and approximately 30 part-time consultants 
(mostly law professors) to conduct the detailed studies that form 
the basis of their reports. The functions of providing advice and 
assistance to the agencies, presenting Conference recommenda- 
tions to the agencies and to Committees of the Congress, and 
seeking implementation of Conference proposals, are the responsi- 
bilities of the Chairman, who has the assistance of a small, highly 
qualified staff and the Conference's part-time consultants. 



This third volume of Recommendations and Reports of the 
Administrative Conference of the United States covers the period 
January 1, 1973 through June 30, 1974. During this time, three 
Plenary Sessions were held and recommendations 73-1 through 
74-4 were adopted, as well as three statements concerning pro- 
posals of the American Bar Association to amend the Adminis- 
trative Procedure Act. In 1972 the Conference adopted a new 
system of numbering its recommendations, so that those previ- 
ously numbered consecutively, through 35, are now identified as 
follows : 

1 to 8—68-1 to 68-8 
9 to 17—69-1 to 69-9 

18 to 22—70-1 to 70-5 

23 to 31—71-1 to 71-9 

32 to 35—72-1 to 72-4 

The material contained in the first part of this volume consists 
of the operative instruments governing the structure and work 
of the Conference, a listing of its membership, and the recom- 
mendations and statements which it has adopted. The latter part 
of the volume, commencing at page 65, contains consultant and 
staff reports, which do not have the formal endorsement of the 
Conference but which were the basis for recommendations 
adopted. Some of these have already been published in scholarly 
journals, and where that is the case the earlier publication has 
been reproduced by photo offset. A report on procedures for 
handling citizens complaints is included as well as a Bibliography 
listing other major consultant and staff reports that did not result 
in recommendations. 



The Administrative Conference Act 1 

Bylaws of the Administrative Conference, as 

Revised May 31, 1974 7 

Council Members 11 

Staff of the Administrative Conference 11 

Members of the Conference 12 

Former Members of the Council 14 

Former Conference Members With Positions at 

Time of Membership 14 

Recommendations of the Administrative 

Conference of the United States 17 

Recommendation 73-1 : Adverse Agency Publicity ... 17 
Recommendation 73-2 : Labor Certification of 

Immigrant Aliens 19 

Recommendation 73-3 : Quality Assurance Systems 

in the Adjudication of 
Claims of Entitlement to 
Benefits or Compensation . . 21 
Recommendation 73-4 : Administration of the Anti- 
dumping Law by the De- 
partment of the Treasury. . 23 
Recommendation 73-5 : Elimination of the "Military 

or Foreign Affairs Function" 
Exemption From APA 
Rulemaking Requirements. . 28 
Recommendation 73-6 : Procedures for Resolution of 

Environmental Issues in 
Licensing Proceedings .... 31 
Recommendation 74-1 : Subpena Power in Formal 

Rulemaking and Formal 

Adjudication 36 

Recommendation 74-2 : Procedures for Discretionary 

Distribution of Federal 
Assistance 38 


Recommendation 74-3 : Procedures of the Department 

of the Interior With Respect 
to Mining Claims on 
Public Lands 43 

Recommendation 74-4 : Preenf orcement Judicial 

Review of Rules of 
General Applicability 48 

Administrative Conference Statement on ABA 

Proposals To Amend the Administrative 

Procedure Act ^^ 

Statement of the Administrative Conference on ABA 

Resolution No. 1 Proposing To Amend the Definition 

OF "Rule" in the Administrative Procedure Act 59 

Conference Statement on ABA Resolution No. 8 
Concerning the Role of Presiding Officers 
IN Formal Proceedings ^2 

Consultant and Staff Reports in Support of 

Recommendations 73-1 Through 74-4 65 

73-1 : Ernest A. E. Gellhorn. Adverse Agency 

Publicity ^'^ 

73-2 : Lynda S. Zengerle. Procedural Deficiencies in 

Labor Certification of Immigrant Aliens 129 

73-3 : Jerry L. Mashaw. Quality Assurance Systems 

in the Adjudication of Claims of Entitlement 

to Benefits or Compensation 160 

73-4 : Warren F. Schwartz. The Administration by 

the Department of the Treasury of the Laws 

Authorizing the Imposition of 

Antidumping Duties 187 

73-5 : Arthur Earl Bonfield. Elimination of the 

"Military or Foreign Affairs Function" 

Exemption From APA Rulemaking 

Requirements 226 

73-6 : Arthur W. Murphy. Procedures for Resolution 

of Environmental Issues in Licensing 

Proceedings 363 

74-1 : Richard K. Berg. Subpena Powers in Formal 

Agency Proceedings 408 

74-2 : Margaret Gilhooley. Standards and Procedures 

for the Discretionary Distribution of 
Federal Assistance 422 


74-3 : Peter L. Strauss. Procedures of the Department 
of the Interior With Respect to Mining 
Claims on Public Lands 451 

74-4 : Memorandum of Committee on Judicial Review. 
Preenforcement Judicial Review of Rules of 
General Applicability 558 

Staff Report in Support of Conference Statements on 
ABA Proposals To Amend the Administrative 
Procedure Act 567 

Memorandum in Support of Statement of the 
Administrative Conference on ABA Resolution 
No. 1 Proposing To Amend the Definition of 
"Rule" in the Administrative Procedure Act 601 

Explanatory Memorandum in Support of Conference 
Statement on ABA Resolution No. 8 606 

Selected Report of Consultants 611 

Victor G. Rosenblum. An Introductory Study of Federal 
Agency Procedures and Practices in Handling 
Citizen-Initiated Complaints 611 

Bibliography of Selected Reports of 
Administrative Conference 658 


[Public Law 89-554, September 6, 1966, 80 Stat. 388, as amended by 
Public Law 92-526 October 21, 1972, Title 5 U.S.C, Chapter 5, Sub- 
chapter III, Section 571 through 576.] 

§ 571 Purpose. 

It is the purpose of this subchapter to provide suitable ar- 
rangements through which Federal agencies, assisted by outside 
experts, may cooperatively study mutual problems, exchange in- 
formation, and develop recommendations for action by proper 
authorities to the end that private rights may be fully protected 
and regulatory activities and other Federal responsibilities may 
be carried out expeditiously in the public interest. 

§ 572 Definitions. 

For the purpose of this subchapter — 

(1) "administrative program" includes a Federal function 
which involves protection of the public interest and the de- 
termination of rights, privileges, and obligations of private per- 
sons through rule making, adjudication, licensing, or investiga- 
tion, as those terms are used in subchapter II of this chapter, 
except that it does not include a military or foreign affairs func- 
tion of the United States ; 

(2) "administrative agency" means an authority as defined by 
section 551(1) of this title; and 

(3) "administrative procedure" means procedure used in car- 
rying out an administrative program and is to be broadly construed 
to include any aspect of agency organization, procedure, or man- 
agement which may affect the equitable consideration of public 
and private interests, the fairness of agency decisions, the speed 
of agency action, and the relationship of operating methods to 
later judicial review, but does not include the scope of agency 
responsibility as established by law or matters of substantive 
policy committed by law to agency discretion. 

§ 573 Administrative Conference of the United States. 

(a) The Administrative Conference of the United States con- 
sists of not more than 91 nor less than 75 members appointed as 
set forth in subsection (b) of this section. 


(b) The Conference is composed of — 

(1) a full-time Chairman appointed for a 5-year term by the 
President, by and with the advice and consent of the Senate. The 
Chairman is entitled to pay at the highest rate established by 
statute for the chairman of an independent regulartory board or 
commission, and may continue to serve until his successor is 
appointed and has qualified ; 

(2) the chairman of each independent regulatory board or 
commission or an individual designated by the board or com- 
mission ; 

(3) the head of each Executive department or other adminis- 
trative agency v^hich is designated by the President, or an in- 
dividual designated by the head of the department or agency; 

(4) vv^hen authorized by the Council referred to in section 
575(b) of this title, one or more appointees from a board, com- 
mission, department or agency referred to in this subsection, 
designated by the head thereof with, in the case of a board or 
commission, the approval of the board or commission ; 

(5) individuals appointed by the President to membership on 
the Council who are not otherwise members of the Conference; 

(6) not more than 36 other members appointed by the Chair- 
man, with the approval of the Council, for terms of 2 years, except 
that the number of members appointed by the Chairman may at 
no time be less than one-third nor more than two-fifths of the 
total number of members. The Chairman shall select the members 
in a manner which will provide broad representation of the views 
of private citizens and utilize diverse experience. The members 
shall be members of a practicing bar, scholars in the field of 
administrative law or government, or others specially informed 
by knowledge and experience with respect to Federal administra- 
tive procedure. 

(c) Members of the Conference, except the Chairman, are not 
entitled to pay for service. Members appointed from outside the 
Federal Government are entitled to travel expenses, including per 
diem instead of subsistence, as authorized by section 5703 of this 
title for individuals serving without pay. 

§ 574 Powers and duties of the Conference. 

To carry out the purpose of this subchapter, the Administrative 
Conference of the United States may — 

(1) study the efficiency, adequacy, and fairness of the adminis- 


trative procedure used by administrative agencies in carrying out 
administrative programs, and make recommendations to ad- 
ministrative agencies, collectively or individually, and to the 
President, Congress, or the Judicial Conference of the United 
States, in connection therewith, as it considers appropriate; 

(2) arrange for interchange among administrative agencies of 
information potentially useful in improving administrative pro- 
cedure; and 

(3) collect information and statistics from administrative 
agencies and publish such reports as it considers useful for 
evaluating and improving administrative procedure. 

§ 575 Organization of the Conference. 

(a) The membership of the Administrative Conference of the 
United States meeting in plenary session constitutes the Assem- 
bly of the Conference. The Assembly has ultimate authority over 
all activities of the Conference. Specifically, it has the power to — 

(1) adopt such recommendations as it considers appropriate 
for improving administrative procedure. A member who dis- 
agrees with a recommendation adopted by the Assembly is en- 
titled to enter a dissenting opinion and an alternate proposal in 
the record of the Conference proceedings, and the opinion and 
proposals so entered shall accompany the Conference recommen- 
dation in a publication or distribution thereof; and 

(2) adopt bylaws and regulations not inconsistent with this 
subchapter for carrying out the functions of the Conference, 
including the creation of such committees as it considers neces- 
sary for the conduct of studies and the development of recom- 
mendations for consideration by the Assembly. 

(b) The Conference includes a Council composed of the Chair- 
man of the Conference, who is Chairman of the Council, and 10 
other members appointed by the President, of whom not more 
than one-half shall be employees of Federal regulatory agencies 
or Executive departments. The President may designate a mem- 
ber of the Council as Vice Chairman. During the absence or 
incapacity of the Chairman, or when that office is vacant, the Vice 
Chairman shall serve as Chairman. The term of each member, 
except the Chairman, is 3 years. When the term of a member 
ends, he may continue to serve until a successor is appointed. 
However, the service of any member ends when a change in his 
employment status would make him ineligible for Council mem- 
bership under the conditions of his original appointment. The 
Council has the power to — 


(1) determine the time and place of plenary sessions of the 
Conference and the agenda for the sessions. The Council shall 
call at least one plenary session each year; 

(2) propose bylaws and regulations, including rules of proce- 
dure and committee organization, for adoption by the Assembly; 

(3) make recommendations to the Conference or its commit- 
tees on a subject germane to the purpose of the Conference; 

(4) receive and consider reports and recommendations of com- 
mittees of the Conference and send them to members of the 
Conference with the views and recommendations of the Council ; 

(5) designate a member of the Council to preside at meetings 
of the Council in the absence or incapacity of the Chairman and 
Vice Chairman ; 

(6) designate such additional officers of the Conference as it 
considers desirable; 

(7) approve or revise the budgetary proposals of the Chair- 
man ; and 

(8) exercise such other powers as may be delegated to it by the 

(c) The Chairman is the chief executive of the Conference. In 
that capacity he has the power to — 

(1) make inquiries into matters he considers important for 
Conference consideration, including matters proposed by in- 
dividuals inside or outside the Federal Government ; 

(2) be the official spokesman for the Conference in relations 
with the several branches and agencies of the Federal Govern- 
ment and with interested organizations and individuals outside 
the Government, including responsibility for encouraging Federal 
agencies to carry out the recommendations of the Conference; 

(3) request agency heads to provide information needed by the 
Conference, which information shall be supplied to the extent 
permitted by law; 

(4) recommend to the Council appropriate subjects for action 
by the Conference; 

(5) appoint, with the approval of the Council, members of 
committees authorized by the bylaws and regulations of the 

(6) prepare, for approval of the Council, estimates of the 
budgetary requirements of the Conference; 

(7) appoint and fix the pay of employees, define their duties 
and responsibilities, and direct and supervise their activities; 

(8) rent office space in the District of Columbia; 


(9) provide necessary services for the Assembly, the Council, 
and the committees of the Conference; 

(10) organize and direct studies ordered by the Assembly or 
the Council, to contract for the performance of such studies with 
any public or private persons, firm, association, corporation, or 
institution under title III of the Federal Property and Adminis- 
trative Services Act of 1949, as amended (41 U.S.C. 251-260), 
and to use from time to time, as appropriate, experts and con- 
sultants who may be employed in accordance with section 3109 of 
this title at rates not in excess of the maximum rate of pay for 
grade GS-15 as provided in section 5332 of this title; 

(11) utilize, with their consent, the services and facilities of 
Federal agencies and of State and private agencies and instru- 
mentalities with or without reimbursement; 

(12) accept, hold, administer, and utilize gifts, devises, and 
bequests of property, both real and personal, for the purpose of 
aiding and facilitating the work of the Conference. Gifts and 
bequests of money and proceeds from sales of other property 
received as gifts, devises, or bequests shall be deposited in the 
Treasury and shall be disbursed upon the order of the Chairman. 
Property accepted pursuant to this section, and the proceeds 
thereof, shall be used as nearly as possible in accordance with the 
terms of the gifts, devises, or bequests. For purposes of Federal 
income, estate, or gift taxes property accepted under this section 
shall be considered as a gift, devise, or bequest to the United 
States ; 

(13) accept voluntary and uncompensated services, notwith- 
standing the provisions of section 3679(b) of the Revised Statutes 
(31 U.S.C. 665(b) ; 

(14) on request of the head of an agency, furnish assistance 
and advice on matters of administrative procedures ; and 

(15) exercise such additional authority as the Council or As- 
sembly delegates to him. 

The Chairman shall preside at meetings of the Council and at 
each plenary session of the Conference, to which he shall make a 
full report concerning the affairs of the Conference since the last 
preceding plenary session. The Chairman, on behalf of the 
Conference, shall transmit to the President and Congress an 
annual report and such interim reports as he considers desirable. 

§ 576 Appropriations. 

There are authorized to be appropriated sums necessary not in 
excess of $700,000 for the fiscal year ending June 30, 1974, 


$805,000 for the fiscal year ending June 30, 1975, $850,000 for the 
fiscal year ending June 30, 1976, $900,000 for the fiscal year end- 
ing June 30, 1977, and $950,000 for the fiscal year ending June 30, 
1978, and for each fiscal year thereafter, to carry out the purposes 
of this subchapter. 

As Revised May 31, 1974 

Section 1. Establishment and Objective 

The Administrative Conference Act, 5 U.S.C. §§ 571 et seq. 
(1970), 78 Stat. 615 (1964), authorized the establishment of the 
Administrative Conference of the United States as a permanent, 
independent agency of the Federal Government. The purpose of 
the Administrative Conference is to improve the administrative 
procedure of Federal agencies to the end that they may fairly 
and expeditiously carry out their responsibilities to protect 
private rights and the public interest. The Administrative Con- 
ference Act provides for the membership, organization, powers 
and duties of the Conference. 

Section 2. Membership 

(A) general 

Each member is expected to participate in all respects accord- 
ing to his own views and not necessarily as a representative of 
any agency or other group or organization, public or private. 
Each member (other than a member of the Council) shall be 
appointed to one of the standing committees of the Conference. 

(b) terms of non-government members 

The terms of non-Government members, who are appointed by 
the Chairman with the approval of the Council, shall terminate 
at 2-year intervals from June 30, 1970, No more than ten per- 
cent of such members shall at any time be in continuous service 
beyond a third term. 

(c) eligibility and replacement 

(1) A member (other than a member of the Council) who is 
designated by a Federal agency shall become ineligible to con- 


tinue as a member of the Conference in that capacity or under 
that designation if he leaves the service of the agency or depart- 
ment. Designations and re-designations of members shall be filed 
with the Chairman promptly, but not less than 30 days prior to 
the first session of the Conference at which such member shall 
sit, except that in exceptional circumstances the Council may 
permit a newly designated or re-designated member to participate 
in any session. 

(2) A person appointed as a non-Government member shall 
become ineligible to continue in that capacity if he enters full- 
time Government service. In the event a non-Government mem- 
ber of the Conference resigns or becomes ineligible to continue as 
a member, the appointing authority shall appoint a successor for 
the remainder of the term. 


Members may not act through alternates at plenary sessions of 
the Conference. Where circumstances justify, an alternate may 
be permitted, with the approval of a committee, to participate 
for a member in a meeting of the committee, but such alternate 
shall not have the privilege of a vote in respect to any action of 
the committee. 

Section 3. Committees 

The following shall constitute the standing committees of the 
Conference : 

1. Committee on Agency Organization and Personnel; 

2. Committee on Claims Adjudications; 

3. Committee on Compliance and Enforcement Proceedings; 

4. Committee on Grant and Benefit Programs ; 

5. Committee on Informal Action ; 

6. Committee on Judicial Review; 

7. Committee on Licenses and Authorizations; 

8. Committee on Ratemaking and Economic Regulation ; and 

9. Committee on Rulemaking and Public Information. 

The activities of the committees shall not be limited to the areas 
described in their titles, and the Chairman may redefine the re- 
sponsibilities of the committees and assign new or additional 
projects to them. With the approval of the Council, the Chairman 
may establish special ad hoc committees and assign special proj- 


ects to such committees. The Chairman shall coordinate the 
activities of all committees to avoid duplication of effort and 
conflict in their activities. 

Section 4. Liaison Arrangements 

The Chairman, with the approval of the Council, may make 
liaison arrangements with representatives of the Congress, the 
judiciary, and Federal agencies which are not represented on 
the Conference. Persons appointed under these arrangements 
may participate in the activities of a designated committee 
without vote ; and may participate in the deliberations of the 
Conference with privileges of the floor, but without vote. 

Section 5. General 

(a) meetings 

All sessions of the Assembly shall be public. Privileges of the 
floor, however, extend only to: (1) members of the Conference, 
(2) persons appointed pursuant to section 4, (3) consultants and 
staff members insofar as matters on which they have been en- 
gaged are under consideration, and (4) persons who, prior to the 
commencement of the meeting, have obtained the approval of the 
Chairman and who speak with the unanimous consent of the 

(B) quorums 

A majority of the members of the Conference shall constitute 
a quorum of the Assembly; a majority of the Council shall con- 
stitute a quorum of the Council. 

(c) Separate Statements 

(1) A member who disagrees in whole or in part with a 
recommendation adopted by the Assembly is entitled to enter a 
separate statement in the record of the Conference proceedings 
and to have it set forth with the official publication of the recom- 
mendation in the Federal Register. A member's failure to file or 
join in such a separate statement does not necessarily indicate his 
agreement with the recommendation. 


(2) Notification of intention to file a separate statement must 
be given to the Executive Secretary not later than the last day of 
the plenary session at which the recommendation is adopted. 
Members may, without giving such notification, join in a separate 
statement for which proper notification has been given. 

(3) Separate statements must be filed within 10 days after 
the close of the session, but the Chairman may extend this dead- 
line for good cause. 


The Conference may amend the bylaws provided that 30 days' 
notice of the proposed amendment shall be given to all members 
of the Assembly by the Chairman. 


Robert's Rules of Order shall govern the proceedings of the 
Assembly to the extent appropriate. 

(July 1, 1974) 



Leonard Garment, Vice-Chairman, Counsel to the President. 

John W. Barnum, Under Secretary, Department of Transporta- 

Robert G. Dixon, Jr., Assistant Attorney General, Department 
of Justice. 

Lewis A. Engman, Chairman, Federal Trade Commission. 

Walter Gellhorn, Professor of Law, Columbia University 
School of Law, New York, N.Y. 

Marion Edwyn Harrison, lawyer, Washington, D.C. 

Harold L. Russell, lawyer, Atlanta, Ga. 

Richard B. Smith, lawyer. New York, N.Y. 

Richard C. Van Dusen, lawyer, Detroit, Mich. 

Richard E. Wiley, Chairman, Federal Communications Com- 


John F. Cushman 
Executive Director 

Richard K. Berg 

Executive Secretary 

Frank Goodman 

Research Director 


Robert W. Hamilton 
Research Director 


(July 1, 1974) 

Robert F. Adams, lawyer, Mobile, Alabama 
Charles E. Allen, General Counsel, Federal Home Loan Board 
William H. Allen, lawyer, Washington, D. C. 
Richard S. Arnold, lawyer, Texarkana, Arkansas 
H. Gregory Austin, General Counsel, Small Business Administration 
Frank A. Bartimo, Assistant General Counsel, Department of Defense 
Clark, Byse, Professor of Law, Harvard University, Cambridge, Massa- 
Donald A. Campbell, Judicial Officer, Department of Agriculture 
Charles L. Clapp, Commissioner, Interstate Commerce Commission 
Manuel Cohen, lawyer, Washington, D. C. 
Calvin J. Collier, General Counsel, Federal Trade Commission 
H. Dale Cook, Director, Bureau Hearings, and Appeals, Social Security 

John J. Corcoran, General Counsel, Veterans Administration 
Louis A. Cox, General Counsel, U.S. Postal Service 
Kenneth Gulp Davis, Professor of Law, University of Chicago Law School, 

Chicago, Illinois 
Ronald M. Dietrich, lawyer, Washington, D. C. 
William O. Doub, Commissioner, Atomic Energy Commission 
Bernard Dunau, lawyer, Washington, D. C. 

Stanley Ebner, General Counsel, Office of Management and Budget 
Robert R. Elliott, General Counsel, Housing and Urban Development 
Rodney E. Eyster, General Counsel, Department of Transportation 
John H. Fanning, Member, National Labor Relations Board 
Ben C. Fisher, lawyer, Washington, D. C. 
James F. Flug, Executive Director, National Legal Aid & Defender 

Ronald B. Frankum, lawyer, Del Mar, California 
Warner W. Gardner, lawyer, Washington, D. C. 
Whitney Gillilland, Commissioner, Civil Aeronautics Board 
Jack Greenberg, Director & Counsel, NAACP Legal Defense & Educational 

Richard L. Griffith, lawyer, Honolulu, Hawaii 

Wolf Haber, Assistant General Counsel, Department of the Treasury 
Daniel T. Hanscom, Chief, Office of Administrative Law Judges, Federal 

Trade Commission 
AsHTON Hardy, General Counsel, Federal Communications Commission 
Geoffrey C. Hazard, Jr., Professor of Law, Yale Law School, New Haven, 

George H. Hearn, Commissioner, Federal Maritime Commission 
Ragan a. Henry, lawyer, Philadephia, Pennsylvania 
S. Neil Hosenball, Deputy General Counsel, National Aeronautics & Space 




Samuel C. Jackson, lawyer, Washington, D. C. 

Cornelius B. Kennedy, lawyer, Washington, D. C. 

William J. Kilberg, Solicitor of Labor, U. S. Department of Labor 

Earl W. Kintner, lawyer, Washington, D. C. 

John A. Knebel, General Counsel, Department of Agriculture 

Victor H. Kramer, Professor of Law, Georgetown University Law Center, 

Washington, D. C. 
George A. LeMaistre, Director, Federal Deposit Insurance Corporation 
Sol Lindenbaum, Executive Assistant to the Attorney General, Department 

of Justice 
David E. Lindgren, Deputy Solicitor, Department of the Interior 
Philip A. Loomis, Jr., Commissioner, Securities and Exchange Commission 
K. E. Malmborg, Assistant Legal Adviser for Management & Consular 

Affairs, Department of State 
Malcolm Mason, Office of General Counsel, Department of Health, Education, 

and Welfare 
Alfred Meisner, Assistant General Counsel for Administration, Department 

of Commerce 
Ira M. Millstein, lawyer. New York, New York 

Anthony L. Mondello, General Counsel, U. S. Civil Service Commission 
John N. Nassikas, Chairman, Federal Power Commission 
William A. Nelson, Vice President & General Counsel, National Airlines, 

Constance B. Newman, Commissioner, Consumer Product Safety Commission 
Leonard Niederlehner, Deputy General Counsel, Department of Defense 
Thomas J. O'Connell, General Counsel, Board of Governors, Federal Reserve 

Owen Olpin, Professor of Law, University of Utah Law School, Salt Lake 

City, Utah 
Max D. Paglin, Atomic Energy Commission 
John W. Pettit, lawyer, Washington, D. C. 
Richard W. Pogue, lawyer, Cleveland, Ohio 

John H. Powell, Jr., Chairman, Equal Employment Opportunity Commission 
Martin F. Richman, lawyer. New York, New York 
Otis M. Smith, Assistant General Counsel, General Motors Corporation 
Dr. Penelope H. Thunberg, economist, Washington, D. C. 
Harold S. Trimmer, General Counsel, General Services Administration 
Peter F. Tufo, lawyer. New York, New York 
Harold H. Voigt, lawyer, Washington, D. C. 

John P. Vukasin, Jr., Chairman, California Public Utilities Commission 
Charles A. Webb, President, National Association of Motor Bus Owners 
James E. Wesner, lawyer, Washington, D. C. 
Meade Whitaker, General Counsel, Internal Revenue Service 
Henry N. Williams, Deputy General Counsel, Selective Service System 
Jerre S. Williams, Professor of Law, University of Texas Law School, 

Austin, Texas 
Robert H. Young, lawyer, Philadelphia, Pennsylvania 
Robert V. Zener, Deputy General Counsel, Environmental Protection 

Joseph Zwerdling, Chief Administrative Law Judge, Federal Power 



(January 1, 1973 -June 30, 1974) 

Position at time of Membership 

Charles D. Ablard, Associate Deputy Attorney General, Department of 

Ralph E. Erickson, Deputy Attorney General, Department of Justice 
Dale W. Hardin, Commissioner, Interstate Commerce Commission 
Edward L. Morgan, Assistant Secretary of Treasury 


(January 1, 1973 -June 30, 1974) 

Carl A. Auerbach, Dean, University of Minnesota Law School, Minneapolis, 

St. John Barrett, Deputy General Counsel, Department of Health, Education, 
and Welfare. 

Charles F. Bingman, Chief, Government Organization Branch, Office of 
Management and Budget. 

James A. Bistline, Assistant Vice President-General Counsel, Southern Rail- 
way System. 

Warren E. Blair, Chief Administrative Law Judge, Securities and Exchange 

Charles N. Brower, Deputy Legal Adviser, Department of State. 

William H. Brown, III, Chairman, Equal Employment Opportunity Com- 

Jack K. Busby, President, Pennsylvania Power & Light Co., Allentown, Pa. 

William E. Casselman, II, General Counsel, General Services Admin- 

Eldon H. Crowell, lawyer, Washington, D.C. 

David S. Dennison, Commissioner, Federal Trade Commission. 

Robert C. Gresham, Commissioner, Interstate Commerce Commission. 

Thomas E. Harris, General Counsel, AFL-CIO, Washington, D.C. 

Arthur E. Hess, Deputy Commissioner, Social Security Administration. 

Carla Hills, lawyer, Los Angeles, Calif. 

Richard H. Keatinge, lawyer, Los Angeles, Calif. 

Alan G. Kirk, Deputy General Counsel, Environmental Protection Agency. 

Arthur Leff, Associate Administrative Law Judge, National Labor Relations 

Charlotte Tuttle Lloyd, Assistant General Counsel, Department of the 



Lee Loevinger, lawyer, Washington, D.C. 

David 0. Maxwell, General Counsel, Department of Housing and Urban 

Robert L. McCarty, lawyer, Washington, D.C. 
Mitchell Melich, Solicitor, Department of the Interior. 
James Mitchell, General Counsel, Department of Housing and Urban 

C. Roger Nelson, lawyer, Washington, D.C. 
L. Clair Nelson, lawyer. New York, N.Y. 

Nathan Ostroff, Chairman, Appeals Board, Department of Commerce. 
David Previant, lawyer, Milwaukee, Wis. 
Edwin F. Rains, Deputy Commissioner of Customs, Department of the 

James T. Ramey, Commissioner, U.S. Atomic Energy Commission. 
Charles R. Ross, lawyer, Hinesburg, Vt. 
Richard F. Schubert, Solicitor, Department of Labor, 
Bernard G. Segal, lawyer, Philadelphia, Pa. 
Ashley Sellers, lawyer, Washington, D.C. 

Edward M. Shulman, General Counsel, Department of Agriculture. 
David F. Sive, lawyer. New York, N.Y. 
Richard E. Stewart, lawyer. New York, N.Y. 

Earl J. Thomas, Director, Office of Inspection, Department of the Interior. 
Frank Wille, Chairman, Federal Deposit Insurance Corp. 


January 1, 1973 -June 30, 1974 



(Adopted June 8, 1973) 

Adverse agency publicity — that is, statements made by an 
agency or its personnel which invite public attention to an 
agency's action or policy and which may adversely affect persons 
identified therein* — can cause serious and sometimes unfair in- 
jury. Where a reasonable and equally effective alternative is not 
available, adverse agency publicity is often necessary to warn of 
a danger to public health or safety or a threat of significant 
economic harm, or to serve other legitimate public purposes. 
However, adverse agency publicity is undesirable when it is 
erroneous, misleading or excessive or it serves no authorized 
agency purpose. 

Agency practices regarding adverse publicity vary widely. 
Some agencies use adverse publicity as the primary method of 
enforcement; for some others it is merely action incidental to 
formal sanctions. Agency rules seldom establish procedures or 
standards for the use of adverse agency publicity, and it is almost 
never subject to effective judicial review. 

In meeting these concerns, this recommendation addresses 
agency use of adverse publicity in connection with investigatory, 
rulemaking and agency adjudicatory processes as well as informal 
agency actions. It recommends the adoption of agency rules con- 
taining minimum standards and structured practices governing 
the issuance of publicity. 

* Publicity as used here is distinguished from the mere decision to make records 
available to the public rather than preserve their confidentiality. That decision 
is governed by separate criteria set forth in the Freedom of Information Act 
(5 U.S.C. §552) and is not within the scope of this recommendation. 




Each agency should state in its published rules the procedures 
and policies to be followed in publicizing agency action or policy, 
and internal operating practices should assure compliance. In the 
adoption of such procedures and policies, each agency should 
balance the need for adequately serving the public interest and 
the need for adequately protecting persons affected by adverse 
agency publicity in accordance with the following standards : 

1. All adverse agency publicity should be factual in content and 
accurate in description. Disparaging terminology should be 

2. Adverse agency publicity relating to regulatory investiga- 
tions of specifically identified persons or pending agency trial- 
type proceedings should issue only in limited circumstances in 
accordance with the criteria outlined below. 

a. Where an agency determines that there is a significant risk 
the public health or safety may be impaired or substantial eco- 
nomic harm may occur unless the public is immediately notified, 
it may use publicity as one of the means of speedily and ac- 
curately notifying the aff'ected public. However, where public 
harm can be avoided by immediate discontinuance of an offend- 
ing practice, a respondent should be allowed an opportunity, 
where feasible, to cease the practice (pending a legal test) in lieu 
of adverse agency publicity. 

b. Where it is required in order to bring notice of pending 
agency adjudication to persons likely to be desirous of participat- 
ing therein or likely to be affected by that or a related adjudica- 
tion, the agency should rely on publicity to the extent necessary 
to provide such notice even though it may be adverse to a 

c. Where information concerning adverse agency action is 
available to the public regardless of agency publicity measures 
and is likely to result in media publicity, adverse agency pub- 
licity should be issued only to the extent necessary to foster 
agency efficiency, public understanding, or the accuracy of news 

3. Adverse agency publicity not included in paragraph 2 above 
should issue only after the agency has taken reasonable pre- 
cautions to assure that the information stated is accurate and that 
the publicity fulfills an authorized purpose. 

4. Where information in adverse agency publicity has a limited 
basis — for example, allegations subject to subsequent agency 


adjudication — that fact should be prominently disclosed. Any 
respondent or prospective respondent in an agency proceeding 
should, if practicable and consistent with the nature of the pro- 
ceeding, be given advance notice of adverse agency publicity re- 
lating to the proceeding and a reasonable opportunity to prepare 
in advance a response to such publicity. 

5. Where adverse agency publicity is shown to be erroneous or 
misleading and any person named therein requests a retraction 
or correction, the agency should issue the retraction or correction 
in the same manner (or as close thereto as feasible) as that by 
which the original publicity was disseminated. 



(Adopted June 8, 1973) 

Under the 1965 amendments to the Immigration and Nation- 
ality Act aliens seeking permanent residence for the purpose of 
employment must obtain a certification from the Secretary of 
Labor that, in essence, there are no suitable workers available in 
the United States and that their employment will not adversely 
affect wages and working conditions. 8 U.S.C. §1182 (a) (14). 
The labor certifications are made by the regional offices of the 
Manpower Administration of the Department of Labor. 

This recommendation, like the underlying study, is confined to 
labor certification for permanent residence and does not reach to 
the certification either of temporary workers or of seasonal or 
daily commuters. In FY 1972 about 60,000 applications for per- 
manent labor certifications were received and about 30,000 were 
granted. Aliens in the professions, sciences and arts [PSA] 
generally make their own applications for employment; all other 
applications are made by the employer for a particular employ- 
ment [job-offer]. 

The procedures and standards for certification and review are 
outlined in the regulations. 29 C.F.R. §§60.2-60.4. Except for two 
lists, of employments where certification is automatic and where 
it is precluded, the regulations are sparse in detail. They are 
supplemented by 14 pages of Guidelines, which in turn are sup- 


plemented by memoranda from the national office of the Man- 
power Administration. Some regions hold these supplemental 
materials confidential while others make them publicly available. 

The initial decision by the certifying officer is made without 
hearing, incorporating information either gathered (in writing 
or by telephone) from the state employment service or inde- 
pendently developed by the oflficer ; the underlying information is 
often vague and formless in nature. Notice of grant or denial is 
given to the Immigration Service or the consular ofl^ce which 
submitted the application, in the case of a PSA applicant, or to 
the employer in the case of a job-offer applicant, but not to the 
alien himself. Ninety days are allowed in which either the alien 
or the employer may appeal a denial ; a considerable part of that 
period may expire before the alien himself has received notice 
of the denial. The Department does not include with its notice 
of denial any advice as to the right of appeal. The Immigration 
Service has since February, 1972 been advising the PSA applicant 
of his right to appeal when it forwards the notice. 

Review is conducted by a reviewing officer in a regional office. 
He is free to go outside the record made by the certifying officer. 
The stated policy is to make the material before the certifying 
officer available to the alien or his employer, but the practicing 
bar denies that that policy is carried out and finds in any case that 
the information is often uninformative. There is no procedure 
for access by the applicant to any new material developed by the 
reviewing officer before final administrative decision. The de- 
cisions on review are ordinarily written and adequately informa- 

One district court has twice afforded judicial review of a 
denial of certification, and has in each case reversed the denial 
with a sharply critical opinion. 


A. Procedures and Standards for Decision 

The Guidelines and appropriate supplemental memoranda 
should be made available to the public as required by the Freedom 
of Information Act. Copies should be maintained in each regional 
office. The published regulations should, at such time as this is 
feasible, be expanded to include the appropriate parts of this 
supplemental material. 


B. The Record for Decision 

The national office of the Manpower Administration should in 
its regulations develop standards which would improve the 
quality and degree of specificity of the record upon which certifi- 
cation is granted or denied. 

C. Taking an Appeal 

1. Notice of denial of certification should be sent by the certify- 
ing officer directly to the alien who is a PSA applicant as well as 
to the Immigration Service and the consular office. Notice of 
denial should be sent the alien job-offer applicant as well as the 
employer; to avoid consequent confusion the regulations might 
appropriately be changed to provide that only the employer can 
appeal denial of a job-offer certification. 

2. A notice of the right of appeal should accompany each denial 
of certification, in conformity with the recent practice of the 
Immigration Service when it forwards notice of denial to a PSA 

3. In cases where the applicant shows that circumstances be- 
yond his control have prevented timely completion of his material 
on appeal, the reviewing officer should allow a protective appeal, 
to be supplemented within a prescribed time. 

D. Decision on Review 

1. The regulations should provide that an applicant on appeal 
has full access to the record upon which the certifying oflficer 
bases his denial. 

2. The regulations should state the circumstances in which the 
reviewing oflficer may appropriately develop new information, 
and should provide for advice to, and opportunity for comment 
by, the applicant if the new information has an effect adverse to 
his interests. 



(Adopted June 8, 1973) 

The federal government is engaged in either the direct ad- 
ministration or the funding of a substantial number of programs 


which involve the adjudication of claims of entitlement to benefits 
or compensation. Examples include veterans' benefits; the basic 
Social Security (OASDI) programs; Medicare and Medicaid; 
public employee retirement benefits ; federal employees' and 
longshoremen's and harbor workers' compensation programs ; and 
programs of categorical public assistance for the aged, blind and 
disabled and for dependent children. 

In many of these programs the number of claims per year is 
very large while at the same time the determinations of fact and 
law involved in adjudicating an individual claim may be quite 
complex and difficult. Moreover, claimants under these programs 
often lack the personal resources or access to technical assistance 
necessary to prepare claims material adequately and to pursue 
hearing or administrative appeal procedures should their claims 
be denied. These factors give rise to a particular concern with 
the quality of the adjudication process and product at all levels 
of the administrative process in programs which make determi- 
nations concerning large numbers of claims of entitlement to 
individual benefits or compensation. 

As a part of a continuous effort to provide the highest possible 
degree of accuracy, timeliness and fairness in the adjudication of 
claims, the following recommendation should be adopted by agen- 
cies which directly administer benefit and compensation pro- 
grams and by agencies which have a capacity and a responsi- 
bility to assure the quality of claims adjudication by grantees of 
federal funds. 


1. Positive caseload management should be recognized as 
essential to the accurate, timely and fair adjudication of claims 
of entitlement to benefits or compensation. A positive caseload 
management system should include three connected operations: 

(1) the development of standards and methods for measuring 
the accuracy, timeliness and fairness of agency adjudications; 

(2) the continuous evaluation of agency adjudications through 
the application of those standards and methods; and (3) the use 
of the information gathered in the course of such evaluation to 
identify needed improvements in adjudicative performance. 

2. As part of their positive caseload management program, 
agencies should begin immediately to explore, develop and imple- 


ment statistical quality assurance reporting systems that will 
indicate the accuracy, timeliness and fairness of claims process- 
ing. In designing such systems, agencies should consider the 
need for information of a type that: 

a) Reflects differences in the types of cases and types of 
issues adjudicated and the stages of the administrative process 
involved ; 

b) Identifies the management unit or, where appropriate, 
the individual adjudicator involved in order that effective 
action may be taken to reinforce success and to improve per- 
formance ; 

c) Permits separate evaluation of (1) substantive decision- 
making, (2) case development effort and (3) procedural 
regularity ; 

d) Enables separate evaluation of particular functions of 
the decision process {e.g., issue statement or evaluation of 
evidence in substantive decision-making). 

3. Agencies should employ such other techniques for gather- 
ing information on their adjudication process, including field 
investigations and special studies, as are required for the evalua- 
tion of accuracy, timeliness and fairness. Agencies should be 
particularly sensitive to the need for better information on the 
extent to which claimants' personal resources, social status and 
access to representation or other assistance may affect the ad- 
judication of claims. 

4. The positive caseload management program should facilitate 
not only objective evaluation of the agency's case processing 
operation, but also the effective utilization of quality assurance 
information in policy formation and operational control. 



(Adopted December 18, 1973) 

The antidumping law (19 U.S.C. §160, et. seq. (1971)) is de- 
signed to prevent foreign manufacturers from selling their prod- 
ducts in the United States market at prices less than those 


charged abroad — at "less than fair value" (LTFV) — if such 
price discrimination "injures" domestic competitors. Whenever 
LTFV sales and resulting injury appear, the antidumping law 
requires the imposition of a duty equal to the amount of the price 

1. The Decisional Process 

(a) Field Investigation. When Treasury receives credible in- 
formation that a foreign manufacturer is engaged in LTFV sales 
injuring domestic industry, it initiates an investigation to de- 
termine whether such sales are in fact occurring in the United 
States market. The information is given to a case handler of the 
United States Customs Service in Washington. He in turn refers 
it to a Customs representative with jurisdiction over the country 
whose producers are being investigated, for inquiry into the prices 
at which the items in question are being sold in the home market, 
and in the United States. This Customs representative — along 
with all other officials involved in the administration of the anti- 
dumping law — is an impartial investigator, rather than a prose- 
cutor seeking to establish that a violation has occurred. Although 
much relevant information must be kept confidential, the present 
practice denies the American producers even the opportunity of 
learning from the Customs representative the manner in which 
the investigation is being conducted and offering suggestions for 
additional inquiry. 

Present Treasury practice is to institute a country-wide foreign 
investigation of the subject product, even when the information 
as to possible dumping pertains only to a single exporter in that 
country. In this investigation, a substantial sample of the sales of 
those firms responsible for sixty percent of the exporting coun- 
try's shipments of that product to the United States is examined. 
If sufficient LTFV sales are found (and if injury has resulted to 
domestic producers) a Finding of Dumping will issue which is 
applicable to all manufacturers of the specified product in the 
exporting country, except those who bear the considerable burden 
of showing that they have made no LTFV sales whatever. The 
effect of this finding is to require assessment of an antidumping 
duty on LTFV sales. 

(b) Agency review and decision. The information assembled 
in the field investigation is transmitted to the case handler in 
Washington. He holds informal meetings with each of the in- 
terested parties separately, in which he discloses relevant, non- 


confidential information, as well as his own tentative views of the 
merits. Both during and after the meeting, each party may pre- 
sent argument and evidence to the case handler. The case handler 
then prepares a detailed report, which includes a proposed tenta- 
tive decision for publication in the Federal Register by the As- 
sistant Secretary for Enforcement, Tariff and Trade Affairs, and 
Operations. This report is forwarded (sometimes with changes 
made by the case handler's superiors) to the Commissioner of 
Customs. On the basis of the report, the Commissioner of Cus- 
toms prepares a Memorandum for the Assistant Secretary recom- 
mending a tentative decision, with supporting documents that 
include a background paper which is what might be termed the 
final "institutional" version of the case handler's report. After 
reviewing the Memorandum, the Assistant Secretary causes a 
tentative decision embodying his views to be published in the 
Federal Register. This tentative decision may take one of three 
forms : a "Withholding of Appraisement Notice," a "Notice of 
Tentative Negative Determination," or a "Notice of Tentative 
Discontinuance of Antidumping Investigation." Only the "With- 
holding of Appraisement Notice" is a tentative affirmative de- 
cision ; while it does not stop shipments from entering the United 
States, it renders all subsequent shipments subject to an anti- 
dumping duty should a Finding of Dumping issue. Thereafter, 
interested parties have an opportunity for briefing and argument 
before the Assistant Secretary. Treasury then issues its final 
decision on whether LTFV sales have occurred.* 

Because the Tariff Commission, in the absence of an agreement 
to an extension of time, must act within three months of publica- 
tion of the "Withholding of Appraisement Notice," and cannot 
act until a final LTFV determination is on the record, the final 
affirmative LTFV decision is issued simultaneously with the 
"Withholding of Appraisement Notice" when no extension has 
been agreed upon, even though the hearing before the Assistant 
Secretary remains to be held. See 19 C.F.R. §§153.34 (a) , .35, & .37 
(1973). In such circumstances, what is at issue in the hearing is 
the withdrawal of the "final" affirmative LTFV decision. Thus, 
for purposes of this recommendation, a "final decision" issued 

* A "Withholding of Appraisement Notice" expires three months after publication 
in the Federal Register. During this period, the matter is considered by the Tariff 
Commission, and a final Finding of Dumping will issue if injury is found. However, 
the foreign exporters may agree to an extension of time of up to three additional months. 
See 19 C.F.R. §153.34 (b) (1973) . In these instances, the matter is not immediately referred 
to the Tariff Commission upon publication of the "Withholding of Appraisement 
Notice." Rather, the procedures described in the text are followed. An extension of 
time is agreed to in the overwhelming majority of cases. 


under the three-month procedure is considered a "tentative de- 
cision." As indicated, this procedure is rarely used. 

The Commissioner's Memorandum to the Assistant Secretary 
is currently unobtainable. Moreover, both the tentative and the 
final decision are extremely general and provide neither a mean- 
ingful explanation of the basis of the determination nor usable 
precedent. Parties' knowledge of the disposition of material issues 
comes mainly from informal discussions with the case handler. 

2. Role of the Tariff Commission 

The current statutory scheme requires that Treasury complete 
its investigation and render an affirmative LTFV determination 
before the Tariff Commission can consider the other issue relevant 
to a dumping finding — whether domestic producers have been, or 
are likely to be, injured. In the recent past, the Tariff Commis- 
sion frequently has found no injury despite the presence of LTFV 
sales, thereby rendering Treasury's considerable expenditures in 
resolving the LTFV issue unproductive. In many of those in- 
stances, the dispositive issue of injury (left until last) was much 
the simpler of the two. There is also some factual overlap be- 
tween the two issues. This rigid statutory bifurcation of the 
decisional process between Treasury and the Tariff Commission 
causes inefficient utilization of valuable agency resources, and 
prevents a preliminary injury determination by the Tariff Com- 
mission that may be desirable. 

3. Judicial Review 

Before a Finding of Dumping can issue, there must have been 
determinations both that LTFV sales by foreign manufacturers 
were occurring, and that American competitors have been, or are 
likely to be, injured thereby. However, judicial review of the 
Finding of Dumping, and of the underlying affirmative determina- 
tions of LTFV sales and injury, is not specifically authorized by 
statute until after assessment of an antidumping duty on a par- 
ticular shipment of the affected product. 19 U.S.C. §169 (1971). 
The assessment itself may raise complicated issues, but generally 
these are not directly related to the LTFV and injury determina- 
tions. Despite active cooperation of Customs officials to expedite 
the assessment, the delay in obtaining judicial review of the 
Finding of Dumping sometimes has proven quite extended. 



A. Any interested party should be given an opportunity to 
confer with the Customs representative, in the presence of the 
foreign exporters under investigation, if they choose to attend. 
This conference normally should be held in the foreign country 
prior to the completion of the representative's report. He should 
apprise the participants of the methods he has employed to com- 
pile and verify data, and should receive suggestions for possible 
additions and refinements. 

B. Those exporters whose sales have been subjected to the 
standard sampling, and as to whom no LTFV sales have been 
found, should be specifically excluded from the Finding of 

C. Upon publication of the tentative decision in the Federal 
Register, the Memorandum of the Commissioner of Customs to 
the Assistant Secretary for Enforcement, Tariff and Trade 
Affairs, and Operations, including all supporting documents, 
should be made available at cost of reproduction, subject to 
deletion of confidential material and its replacement by a non- 
confidential summary where feasible. This will allow more pre- 
cise focusing on contested issues in later proceedings before the 
Assistant Secretary. 

D. Both the tentative and the final decision should contain a 
statement of findings and conclusions and the reasons or bases 
therefor, on all material issues of fact or law presented. A more 
revealing tentative decision will greatly facilitate each party's 
presentation before the Assistant Secretary for Enforcement, 
Tariff and Trade Affairs, and Operations. Both decisions, if so 
detailed, will provide a reviewing court with authoritative docu- 
ments enumerating the bases of the determination from which 
appeal is taken, and will constitute a body of precedent on the 

E. The present bifurcation of the decisional process between 
the Department of the Treasury and the Tariff Commission, 
established in 1954, is, from the standpoint of administrative 
procedure, unnecessary and inefficient. At a minimum, section 160 
of Title 19, United States Code, should be amended to enable 
Treasury and the Commission to coordinate their efforts, so that 
the injury investigation may be conducted either prior to, or 
simultaneously with, the LTFV investigation, as the circum- 
stances warrant. Such amendment would enable the Tariff Com- 
mission to make a preliminary determination of likelihood of in- 


jury before issuance of a Withholding of Appraisement Notice by 

F. Section 169 of Title 19, United States Code, should be 
amended so as to allow appeal to the courts immediately after 
issuance of the Finding of Dumping. 

Statement of Malcolm S. Mason 

It is disappointing that, apparently on grounds of convenience 
in administration, the Conference approves as it does in para- 
graph B of this Recommendation, the imposition of a sanction on 
four exporters who are not shown to have violated the rule against 
dumping (and indeed may be victims of dumping by competing 
exporters in their own country) merely because six strangers of 
the same nationality have violated. Realistically, this imposes a 
discriminatory presumption that remains a heavy economic 
burden even though dumping duties may in fact still be avoided. 
It is not generally, and should not be, our legal practice to impute 
guilt by nationality this way without proof of conspiracy or 
other stronger grounds. 



(Adopted December 18, 1973) 

The basic principle of the rulemaking provisions of the Ad- 
ministrative Procedure Act — that an opportunity for public par- 
ticipation fosters the fair and informed exercise of rulemaking 
authority — is undercut by various categorical exemptions in 5 
U.S.C. §553 (a). More than 25 years' experience with rulemaking 
under the APA has shown some of these broad exemptions to 
be neither necessary nor desirable. The Administrative Confer- 
ence has previously recommended elimination of the exemptions 
for matters "relating to public property, loans, grants, benefits, 
or contracts" (Recommendation 69-8, October 22, 1969). Since 
rules on those subjects may bear heavily on nongovernmental 
interests, the Conference concluded that their categorical ex- 
emption from generally applicable procedural requirements was 


unwise. For similar reasons, the breadth of the present exemp- 
tion for all rules which involve a "military or foreign affairs 
function" is unwarranted. 

As with the earlier Recommendation, elimination of the cate- 
gorical exemption for military or foreign affairs functions would 
not diminish the power of the agencies to omit APA rulemaking 
procedures when their observance is found to be impracticable, 
unnecessary, or contrary to the public interest, or when other 
exemptions contained in Section 553 are applicable, such as those 
for "general statements of policy" or for rules relating to "agency 
management or personnel." In addition, the present Recommen- 
dation would retain limited exemptive provisions specially di- 
rected to the needs of military and foreign affairs rulemaking. 


(1) The APA's categorical exemption for "military or foreign 
affairs function" rulemaking should be eliminated. 

(2) Two aspects of special concern in the military and foreign 
affairs areas should be dealt with by modified exemptive pro- 
visions in place of the present categorical one : 

(a) Rulemaking in which the usual procedures are inappro- 
priate because of a need for secrecy in the interest of national 
defense or foreign policy should be exempted on the same basis 
now applied in the freedom of information provision, 5 U.S.C. 
§552(b)(l). That is. Section 553(a) should contain an ex- 
emption for rulemaking involving matters specifically required 
by Executive order to be kept secret in the interest of national 
defense or foreign policy. 

(b) Some of the agencies affected by elimination of the cate- 
gorical exemption issue numerous rules for which public pro- 
cedures would be inappropriate or unnecessary. Such agencies 
would find it burdensome to make case-by-case findings that 
the usual procedures are "impracticable, unnecessary, or con- 
trary to the public interest" under Section 553(b) (B). Repeal 
of the categorical exemption for "military or foreign affairs 
functions" should not be construed to discourage use of the 
implicit power to apply the Section 553(b) (B) exemption on 
an advance basis to narrowly drawn classes of military or 
foreign affairs rulemaking. It is therefore recommended that 
repeal of the exemption be accompanied by statutory clarifica- 
tion of the agencies' power to prescribe by rule specified cate- 
gories of rulemakings exempt by reason of Section 553(b) (B), 


provided that the appropriate finding and a brief statement of 
reasons are set forth with respect to each category. Though it 
would not be mandatory, agencies should consider using notice- 
and-comment procedures for adoption of the exemptive rule 
itself. Statutory amendment should also amplify the existing 
Section 553(b) (B) standards for exemption by including 
specific reference to the national interest in the military- 
foreign affairs area.* 

(3) Wholly without statutory amendment, agencies already 
have the authority to use the generally applicable APA pro- 
cedures for rulemaking when formulating rules of the exempt 
types. They are urged to do so, wherever appropriate, in matters 
now excluded by the "military or foreign affairs function" 


Section 553(a) and the relevant part of 553(b), amended in accordance 
with this recommendation might read as follows: 

§553. Rule making 

(a) This section applies, according to the provisions thereof, except to the 
extent that there is involved — 

(1) a matter pertaining to a military or foreign affairs function of the 
United States specifically required by Executive order to be kept secret 
in the interest of the national defense or foreign policy; or 

(2) a matter relating to agency management or personnel [or to public 
property, loans, grants, benefits, or contracts]. t 

(b) ♦ * * 

Except when notice or hearing is required by statute, this subsection does not 

* * * 

(B) when the agency for good cause finds that notice and public 
procedure thereon would be impracticable, unnecessary, or contrary 
to the public interest (including national interest factors if a military 
or foreign affairs function is involved). The agency shall incorporate 
in each rule issued in reliance upon this provision either (i) the 
finding and a brief statement of reasons therefor, or (ii) a statement 
that the rule is within a category of rules established by a specified 
rule which has been previously published and for which the finding 
and statement of reasons have been made. 

* An Appendix to this recommendation sets forth suggested language to effect the 
changes recommended by paragraph (2). 
i Recommendation 69-8 proposes the deletion of the bracketed phrase. 




(Adopted December 19, 1973) 

The new environmental legislation, especially the National 
Environmental Policy Act, has imposed on licensing agencies 
responsibility to consider environmental values in licensing that 
involves major Federal action significantly affecting the environ- 
ment. The new responsibility has created new difficulties and has 
exacerbated old problems for the agencies. 

The nature, complexity and sheer number of the issues to be 
considered make it desirable that the agencies, in appropriate 
cases, treat generically issues common to more than one proceed- 
ing. In addition to promoting agency efficiency, such treatment 
will permit more effective presentations by interested organiza- 
tions which may lack the necessary resources for appearances in 
all the individual cases in which the same generic issue is present. 
It is especially important, given the wide public interest in en- 
vironmental issues, that the public be given adequate notice of 
the generic proceeding and of the issues being considered. 


A. Generic Proceedings 

1. Each licensing agency should analyze the activities subject 
to its jurisdiction to identify environmental issues common to 
more than one application, and appropriate for across-the-board 
treatment. Issues so identified should be made the subject of 
"generic" proceedings, with the conclusions published and bind- 
ing in subsequent cases, subject to departure. or reexamination 
only in accordance with paragraph 3. 

2. Each licensing agency should exercise discretion consistent 
with its governing statute to define the format of such a generic 
proceeding. Opportunity should be afforded for the presentation 
of oral testimony and cross-examination where required by law 
or where the agency considers it desirable for the development 
of an adequate record relevant to the particular issues. 


3. Each licensing agency should select such form of procedure 
as will enable it ordinarily to apply generic decisions in subse- 
quent licensing proceedings (a) without departure except where 
special local circumstances justify individualized treatment, and 
(b) without reexamination except where changed circumstances, 
e.g., material information not previously available to the agency, 
or a change in applicable law, raise a substantial question as to 
the continuing validity of the decision. Where the agency de- 
termines to reexamine the generic decision in whole or in part, 
it should consider the advisability of suspending final disposition 
of the licensing proceeding pending the conclusion of a new 
generic proceeding, and should, in any event, provide to affected 
interests adequate notice and opportunity to participate in the 

4. The agency should recognize a duty to reexamine generic 
decisions from time to time, as, for example, where technology 
is changing, or where currently available information indicates 
the need for modification. 

5. The giving of binding effect to generic decisions creates 
potentially serious problems for the general public, who will not 
ordinarily be aware of the existence of a proceeding. Accordingly, 
the agency must be careful to structure requirements of notice 
in such a way as to ensure that persons in areas likely to be 
affected by future licenses and environmental groups who have 
exhibited interest in related problems receive adequate notice. 

B. Public Information 

1. Each licensing agency should make it a standard practice to 
disclose and make available to the public at the earliest prac- 
ticable date all of the basic studies, reports and other documents, 
not excepted by law or privileged against disclosure, upon which 
the application or any recommendation or position of the agency 
or its staff is based and which the agency may reasonably antici- 
pate will be sought to be obtained during the proceeding; and the 
agency should require applicants to follow a similar practice at 
the time an application is filed. 

2. Environmental statements should be drafted in terms under- 
standable to laymen and regulations for license applications 
should stress as a major goal provision of information to the 
public on environmental questions. 


Statement of Kenneth Culp Davis 

Recommendation 73-6 may be the least distinguished recom- 
mendation the Administrative Conference has adopted. It tells 
agencies what their practices should be, without a report of what 
those practices are or why they are what they are. It is unsup- 
ported by a factual study either of the subject matter of the 
recommendation or of a representative portion of that subject 

Even though the provisions of 73-6 that I regarded as most 
objectionable were deleted from the proposal during the plenary 
session, I should like to explain why I joined a substantial mi- 
nority of the Conference in voting against the adopted version. 
My principal reason is that each of the three main provisions 
is based on uninformed thinking in the abstract rather than on 
a careful study of the relevant facts and the relevant law, as I 
shall now show. 

One main thrust of 73-6 is toward more rulemaking ("generic 
proceedings") under the National Environmental Policy Act. Yet 
the Conference had no information whatsover about the extent 
of rulemaking under NEPA. For all that the Conference knew, 
the rulemaking might in fact be excessive instead of deficient. 

If the Conference had known how far the agencies have re- 
sponded to the prodding of the Council on Environmental Quality 
to engage in more rulemaking (see CEQ 1972 Ann. Rep., page 
228), its recommendation might have been the opposite: It might 
have commended the agencies for doing more rulemaking under 
NEPA than they have done apart from NEPA. At all events, the 
recommendation was based on factual guesses and not on in- 
formation about agencies' practices. 

Without facts about hearings, lack of hearings, or kinds of 
hearings under NEPA, the Conference favors "oral testimony 
and cross-examination." The push is indeed gentle, but it is un- 
mistakably for such procedure and not against it. Yet the only 
factual report the Conference had before it was about the Atomic 
Energy Commission, whose procedure is governed by a unique 
statute requiring trial-type hearings even in absence of issues of 
fact or of policy. If the Conference had had facts about licensing 
procedures for housing projects, oilwell drilling, pipelines, graz- 
ing, waterway structures, and use of national forests, its mild 
push might have been in the opposite direction : It might have 
quoted with approval from Professor Walter Gellhorn, 48 


A. B.A.J. 243, that "some of this country's gravest administrative 
deficiencies stem from lawyer-induced overreliance on courtroom 
methods to cope with problems for which they are unsuited." 
With no information as to whether hearings are held in 95% of 
NEPA cases or in only 5%, and with no information as to 
whether hearings that are held are public meetings or involve 
oral testimony and cross-examination, the Conference has thrown 
its weight on the side of trial procedures, whether or not the 
governing statute requires a hearing. The position is quite the 
opposite of that of the courts, as the Conference did not know 
but should have known. The courts generally hold in NEPA 
cases that public meetings suffice, without oral testimony subject 
to cross-examination, even when a statute requires a hearing. 
E.g., Citizens Airport Committee v. Volpe, 351 F. Supp. 52 
(E.D.Va. 1972) (airport approval) ; Keith v. Volpe, 352 F. Supp. 
1324 (CD. Calif. 1972) (highway approval). See ch. 28, on "The 
National Environmental Policy Act," and more particularly § C, 
on "Procedural Problems Relating to Party Participation and 
Right to Be Heard," in K. Davis, Administrative Law Cases — 
Text— Problems (5th ed. 1973) 598-602. 

The recommendation that in subsequent licensing proceedings 
an agency should "ordinarily" neither depart from nor reexamine 
its "generic decisions" seems directly contrary to the holding in 
Calvert Cliffs' Coordinating Committee v. Atomic Energy Com- 
mission, 449 F.2d 1109 (D.C. Cir. 1971), that an AEC rule could 
not govern a licensing proceeding because "NEPA mandates a 
case-by-case balancing judgment on the part of federal agencies." 
449 F.2d at 1123. The law of the Calvert Cliffs case may "ordi- 
narily" apply ; the Conference had before it no legal analysis to 
the contrary. Nor did the Conference have before it any study 
of such relevant legal questions as (a) whether an agency may 
make "generic decisions" binding even when they are not binding 
under the law of res judicata, (b) what agencies that are sub- 
ject to NEPA lack of statutory grant of power to make rules 
having force of law, (c) whether an agency lacking such a statu- 
tory grant of power may legally refuse in a subsequent proceed- 
ing to reexamine a "generic decision," or (d) what procedure, if 
any, an agency may use in a "generic proceeding" that will allow 
it to refuse to reexamine its conclusions in a subsequent proceed- 
ing. Acting without studies of such questions seems to me to be a 
headlong jump into the darkness. 

My principal assertion is not that the positions the Conference 
has taken in 73-6 are unsound but that they are unsupported by 


needed studies of the facts and the law. Of the 45 recommenda- 
tions the Conference has made in its first six years, I have voted 
for almost all, and this is the only one that has seemed to me to be 
based on insufficient understanding. A record of 44 out of 45 is 
fairly good, but are my standards too high if I insist that 45 out 
of 45 should be based on studies of the relevant facts and the 
relevant lav^^? 

Statement of David Sive 

During several of the meetings of the Committee on Licenses 
and Authorizations at v^^hich we considered the matters involved 
in Recommendation 73-6, I indicated my disagreement with sev- 
eral details of both the Recommendation itself and the Com- 
mittee's supporting statement. 

It is my view that: 

1. The re-examination permitted of agency generic decisions 
should be less restricted than the Recommendation suggests ; 

2. The Recommendation should more clearly mandate — as it 
did in an earlier Committee draft — earliest possible disclosure by 
the concerned agency of environmental reports. On the other 
hand, I want to emphasize my agreement with the substance of 
each principal aspect of the Recommendation. Some comments 
were made in the plenary session debate to the effect that certain 
aspects of the Recommendation should have received longer and 
deeper study, and that consideration by the Committee might 
have been too heavily based upon Professor Murphy's excellent 
study of the licensing activities of the Atomic Energy Commis- 
sion. It is, of course, correct that the subject matter of Recom- 
mendation 73-6 could have received longer study. It is also true 
that any matter of the nature of those which come before the 
Conference or any of its Committees can be studied for three, 
five or even ten years without enabling the Conference, the 
Committee or its consultants to state definitively at the end of 
such period: "This concludes all helpful study of the subject 

Recommendation 73-6 was considered thoroughly and at length 
by the Conference Committee, whose membership reflected broad 
agency representation and considerable experience in dealing 
with environmental problems. The Recommendation was circu- 


lated for comment to all agencies likely to be affected, and com- 
ments from nearly all those agencies were received and con- 
sidered. While several of the agencies expressed doubt that 
generic proceedings would be helpful in their licensing pro- 
ceedings, there was sufficient favorable response to the major 
points of the Recommendation to justify our conclusion that the 
Recommendation was broadly pertinent to federal licensing ac- 
tivities which affect the environment. Of course, nothing in the 
Recommendation calls for any agency to employ generic pro- 
ceedings where in the agency's judgment such proceedings are 

We must bear in mind that environmental law is a rapidly 
evolving field. The National Environmental Policy Act is itself 
a relatively new statue, and the problems it poses for many 
agencies cannot await post mortem analysis. I think it is no 
ground for criticism that this Recommendation attempts to ex- 
trapolate from an admittedly limited body of experience in order 
to provide guidance for agencies in dealing with these problems 
in the future. The Administrative Conference was created to 
provide an advisory body whose membership is "specially in- 
formed by knowledge and experience with respect to Federal 
administrative procedure." 5 U.S.C. §573 (b)(6). The members 
are entitled and expect to rely on their knowledge and experience 
in evaluating any proposal before them and did so in this case. 
It seems to me that by using such expertise to act with a prompt- 
ness that permits affected agencies to profit from the recommen- 
dation instead of from their own mistakes, the Conference is 
doing precisely what its statutory charter intended. 



(Adopted May 30-31, 1974) 

The present recommendation implements, and somewhat ex- 
pands, the statement of principle adopted by the Conference in 
June 1973 with respect to the American Bar Association's Reso- 
lution No. 10 concerning proposed amendments to the Adminis- 
trative Procedure Act. It speaks only to the issue of subpena 


authority in formal proceedings under the Administrative Pro- 
cedure Act, and does not reflect any judgment as to the need for 
general or specific grants of subpena authority in other situations. 


The Administrative Procedure Act should be amended (1) to 
make agency subpenas available in all agency proceedings, both 
rulemaking and adjudication, which are subject to sections 556 
and 557 of title 5, United States Code, and (2) to make clear that 
the power to issue subpenas in such proceedings shall be delegated 
to presiding officers. 

We propose the following amendments to implement this 
recommendation : 

1. Amend section 555(d) of title 5, United States Code to read 
as follows: 

(d) Agency subpenas authorized by law shall be issued to a 
party on request and, when required by rules of procedure, on 
a statement or showing of general relevance and reasonable 
scope of the evidence sought. Each agency shall designate by 
rule the officers, who shall include the presiding officer in all 
proceedings subject to section 556 of this title, authorized to 
sign and issue subpenas. On contest, the court shall sustain 
the subpena or similar process or demand to the extent that 
it is found to be in accordance with law. In a proceeding for 
enforcement, the court shall issue an order requiring the ap- 
pearance of the witness or the production of the evidence or 
data within a reasonable time under penalty of punishment 
for contempt in case of contumacious failure to comply. 

2. Amend section 556 of title 5, United States Code to add the 
words "subpena authority;" in the heading after the words 
"powers and duties ;", to delete the words, "authorized by law" in 
subparagraph (c) (2), to redesignate subsections (d) and (e) as 
(e) and (f) respectively, and to add the following subsection (d) : 

(d) In any proceeding subject to the provisions of this 
section, the agency is authorized to require by subpena any 
person to appear and testify or to appear and produce books, 
papers, documents or tangible things, or both, at a hearing 
or deposition at any designated place. Subpenas shall be issued 
and enforced in accordance with the procedures set forth in 
section 555(d) of this title. In case of failure or refusal of 


any person to obey a subpena, the agency, through the At- 
torney General unless otherwise authorized by law, may in- 
voke the aid of the district court of the United States for any 
district in which such person is found or resides or transacts 
business in requiring the attendance and testimony of such 
person and the production by him of books, papers, documents 
or tangible things. The authority granted by this subsection 
is in addition to and not in limitation of any other statutory 
authority for the issuance of agency subpenas and for the 
judicial enforcement thereof. 



(Adopted May 30-31, 1974) 

The provision of assistance by the Government has a major 
impact upon the general public, as well as upon those who seek 
aid and those who particularly benefit from it. As with any other 
governmental activity of similar importance, in dispensing as- 
sistance agencies should not be free to act completely within 
their own discretion, ad hoc, unguided by standards and insulated 
from the complaints of those who dispute the propriety of agency 
decisions. Such unchannelled discretion not only creates the 
occasion for arbitrary action, but also prevents the agencies 
from giving their programs the effective policy direction essential 
for the achievement of statutory aims. 

This Recommendation calls upon each agency which has dis- 
cretion in the distribution of assistance under a domestic program 
to identify publicly the specific results it expects the assistance 
to achieve; to develop criteria based on that formulation for 
awarding aid ; and to utilize public procedures for developing and 
enforcing the program's criteria and other requirements. The 
adoption of these measures has advantages for all concerned. For 
the agencies, it promotes the rationality of decision-making by 
creating a stimulus towards analysis and specification of program 
aims. Applicants and recipients benefit from more consistent 
and predictable assistance terms, and from the open opportunity 
to seek an award. The affected public can monitor compliance in 


a way that promotes program purposes. And agency actions 
become more comprehensible to all involved. 

The Conference has previously adopted tv^o recommendations 
directed to particlar categories of assistance programs covered 
by the present Recommendation and urging, with respect to those 
categories, some of the same measures here proposed. Moreover, 
those earlier recommendations, since they were more narrowly 
focused, set forth procedures in addition to those here proposed, 
useful for the particular types of assistance programs they 
covered. Recommendation 71-4, dealing only with discretion- 
ary grant programs, urges, as does the present Recommendation, 
the development of criteria by rulemaking and sets forth particu- 
larized public notice and applicant notification procedures ap- 
propriate for that type of Federal assistance. Similarly, Recom- 
mendation 71-9, directed only to grant-in-aid programs, describes 
in some detail complaint procedures and information systems par- 
ticularly applicable to that type of Federal assistance. The present 
Recommendation is not meant to supersede those earlier pro- 
posals; but where it suggests additional procedures not there 
described, it is intended to supplement them. 


A. Scope of the Recommendation 

In its broadest sense. Federal assistance includes any expendi- 
ture made by the Government to provide goods or services to 
the public, whatever the form of transfer ; thus it includes money 
grants and benefits, in-kind aid, financing, insurance, and the 
permitted use of public goods. This Recommendation is directed 
to domestic programs for the provision of all forms of assistance 
except services (where personnel considerations must be given 
special account). Since, however, the purpose of the Recommenda- 
tion is to regularize agency exercise of discretion in the distribu- 
tion of assistance, its provisions do not apply to programs in 
which no such discretion exists (e.g., "benefit" and "formula" 
programs in which aid is distributed on the basis of statutory 
entitlement) ; nor do they apply to contractual agreements 
covered by the Government's procurement regulations and its 
system of award and dispute procedures. 


B. Articulation of Objectives, Criteria and Requirements 

1. Statement of Objectives and Criteria 

Each agency that has discretionary authority to determine the 
recipients under an assistance program, and the terms, amounts 
and purposes of awards, should publicly state the specific results 
which it expects the assistance to achieve. The agency should also 
identify any major technical obstacles hindering the achievement 
of these objectives, describe its strategy for overcoming them and 
make this statement public where doing so would not frustrate 
accomplishment of the program's goals. On the basis of such 
formulation, the agency should articulate the criteria guiding 
its actions in making awards. Periodically, the agency should 
review the adequacy of its program objectives and assistance 
criteria in light of the results achieved and changes in the public 

2. Nature of Assistance Criteria 

To ensure performance-related, impartial choice in selection of 
recipients, whenever possible the agency's assistance criteria 
should provide for the award of aid either on an entitlement basis, 
to all who meet specified requirements, or on a competitive basis, 
to those who best satisfy stated selection factors. While consider- 
able judgment may be left to the decision-maker in their applica- 
tion, the criteria should provide sufficient guidance to enable 
determinations to be made on a rational and justifiable basis. 

In research, demonstration, developmental and other experi- 
mental programs, however, an agency will not always be able to 
specify its assistance criteria fully because of uncertainty about 
the results to be sought and the means of their achievement. To 
a corresponding degree, the choice of a recipient will involve 
greater judgment and in many instances subjective choice. Never- 
theless, at each stage of program development, the agency should 
refine its selection basis and provide as equal an opportunity to 
compete as it can. 

3. Requirements Imposed on Recipients 

The agency should state clearly any specific results it expects 
the recipient to achieve. Where possible it should promulgate 
these and any other requirements it imposes on the operation or 
fiscal administration of assisted programs in the form of generally 


applicable rules, in preference to attaching such requirements as 
special conditions to particular assistance agreements. 

4. Degree of Specificity 

Agencies should state their objectives, criteria and require- 
ments with as much specificity as practicable, and with clear 
indication of their purpose. Since, however, flexibility in the 
actual operation of assistance programs is useful, and diversity 
of approach often necessary, requirements relating to the manner 
of operation of recipients should be only as detailed and specific 
as is necessary to realize the program objective. 

5. Procedures for Development 

Agencies should develop their assistance criteria and generally 
applicable requirements through a procedure involving public 
participation, by following the notice and comment provisions of 
the Administrative Procedure Act, 5 U.S.C. §553. 

C. Complaint Procedures 

1. Establishment of Complaint Procedures 

Agencies benefit by encouraging affected persons to report in- 
stances in which, in their belief. Federal standards (including 
the criteria for distribution of aid and any statutory or regula- 
tory requirements) are not being observed in program adminis- 
tration. Such reports provide a source of information concerning 
operational problems and successes, supplementing whatever 
audits and field inspections the agency may conduct. Assertions 
that standards are being disregarded are indicative of program 
problems that the Federal agency must solve, by revising its own 
operations, by invoking sanctions for non-compliance or by re- 
examining the adequacy and appropriateness of the requirements 
themselves. Consequently, assistance agencies should make pro- 
cedures available by which persons may formally report that 
Federal standards intended to benefit or protect them are being 

2. Nature of Procedures 

Agencies should permit dissatisfied persons a suitable oppor- 
tunity to submit information and argument in support of their 
assertions. The agency should specify the complaint procedure or 
procedures applicable to each of the programs it administers. 


D. Application to Delegated Programs 

In some programs, assistance recipients have been delegated 
an administrative role like that of Federal agencies in discretion- 
ary programs : to delegate-recipient agency dispenses assistance 
and exercises some discretionary power to decide who will re- 
ceive aid, in what amounts, on what terms, and for what pur- 
poses. An example is the role of community action agencies 
under the Economic Opportunity Act, 42 U.S.C. §§2701, et seq. 
In such programs, if it has the power to do so, the Federal agency 
should direct such recipients to observe Part B of this Recom- 
mendation, and to adopt procedures in accordance with Part C 
for receiving reports alleging violation by the recipient of its own 
established objectives, criteria and requirements. Reports alleging 
that the recipient's objectives, criteria and requirements do not 
accord with Federal standards should be entertained at the 
Federal agency level. 

Statement of Malcolm S. Mason 

Although this is an important Recommendation which takes a 
broad and sound view of the need for structured administration 
and discretion in an area where structure is largely absent, it is 
not sound in its present form as applied to new and creative 

If this Recommendation in its present form had been adopted 
ten years ago and had been honored, there would have been no 
Head Start. Programs that require decisive action and the un- 
leashing of enthusiasms that have been suppressed, of courage 
hidden in unexpected places, would be talked to death, analyzed 
to death, bureaucratized to death. 

As applied to that kind of program, this Recommendation, 
instead of promoting rationality of decision-making, would pro- 
mote rationalization and jargonization of decision-making. By 
creating painful consequences for those who may have the right 
goals and the right approach but have articulated them less self- 
defensively than others, they would not counteract, they would 
encourage, the tendency to avoid risks inherent in making 

In the case of Head Start, which I take only as an example 
sufficiently familiar to be recognized, those who thought they 
were improving cognitive achievement as a primary objective 
and those who recognized that as a spurious goal but felt they 
were achieving family solidarity and dignity, through participa- 


tion in the children's education, as a primary objective, and 
several other factions, would have debated endlessly and the pro- 
gram would never have started. Because, under this Recommen- 
dation, a stated objective carries consequences, they would have 
been forced to fight on the statement of objectives or to compro- 
mise and water down the program. 

The Recommendation should have been adopted only after ex- 
cluding expressly the Head Start kind of program and only after 
deleting the gratuitously inappropriate reference under Part D to 
the Community Action Program as one that should specifically 
be subject to this Recommendation, The Conference should have 
explicitly undertaken, and I hope it will now undertake, separate 
fresh thought to the kind and extent of structural discretion that 
is appropriate for the sort of program typified by Head Start. 



(Adopted May 30-31, 1974) 

Although largely unknown to lawyers outside the West, the 
Department of the Interior's disposition of mining claims on 
public lands is a significant field of Federal administrative activity 
and an important element in planning rational use of the public 

The procedures for establishing or "locating" mining claims 
are set out by the General Mining Law of 1872, which has not 
been significantly amended since its passage. A claim is located 
by marking the corners of the acreage claimed, posting a notice 
on the land, and, if state law requires, performing specified work. 
Notice is then filed in the county courthouse. No valuable mineral 
need have been found, nor is the prospector under any obligation 
to reveal what mineral he believes to be present in order to ex- 
clude possible rivals from the land. A valid possessory interest is 
acquired against the United States, however, only if a "valuable" 
mineral deposit has been "discovered." If certain formalities 
are then complied with, the prospector may convert this posses- 
sory interest into full title, or "patent," from a modest sum ; the 
possessory interest in a demonstrably valid claim is so secure, 


however, that such purchases are rarely sought. Claims are 
neither registered with the Federal Government nor paid for un- 
less a patent is sought; nor need any discovery of valuable 
mineral be formally recorded anywhere in advance of a possible 
application for patent. 

In the view of the Department of the Interior, a claim may be 
valid even if inactive; all claims are regarded as potential clouds 
on the Government's title. Thus, when a dam is to be built or a 
National Park secured, obtaining clear title to the land requires 
the Government to identify claims for which patent applications 
have not been made. This currently requires Bureau of Land 
Management employees to make a painstaking search of dis- 
organized and ancient county records for each possibly valid 
claim and for evidence for its descent. Part A of the present 
Recommendation urges the elimination of this wasteful and un- 
certain system by establishment of a registration process, and 
suggests interim measures which the Department may take until 
that legislation is enacted. 

Once the identity of existing claimants is known, the present 
system provides for testing the validity of their claims by formal 
administrative adjudications in which, although the burden of 
persuasion is upon the claimant, the Government must first 
establish prima facie that no "discovery" of any "valuable" 
mineral has been made. It must do this without the benefit of 
subpena power, or even of any requirement that the claimant 
define his claim (e.g., by stating the nature of the minerals dis- 
covered) before the Government puts on its case. The practical 
effect of these hearing procedures is that a mineral examiner 
must be sent to inspect every claim that may be asserted. Adjudi- 
cation is performed by administrative law judges in the Depart- 
ment's Oflfice of Hearings and Appeals, subject to de novo review 
by the Board of Land Appeals in the same Office. Although the 
Department has full rulemaking authority, it has typically used 
case adjudication to develop positions on such central issues as 
what constitutes the "discovery" necessary to render a claim 
valid against the Government. To the extent cases are decided on 
the basis of interpretations or policy that a court would find 
within the Secretary's discretion, the Department's Office of 
Hearings and Appeals exercises important policy-making func- 
tions ; yet at present no provision is made for Secretarial review 


of its conclusions. Judicial review of these adjudicatory determi- 
nations can be obtained only in United States District Court, in 
accordance with the so-called "nonstatutory review" provisions 
of 5 U.S.C. §703. The "substantial evidence" standard of 5 U.S.C. 
§706(2) (E) is of course applicable, but some confusion remains 
as a result of early cases treating the Department's findings of 
fact as near-conclusive. Part B of the present Recommendation 
seeks to rationalize the Department's adjudicatory system by 
providing fairer and more efficient hearing procedures, bringing 
the Department's case law more closely within a unified policy- 
making structure, and establishing judicial review provisions in 
appellate rather than trial-level federal courts, with explicit 
affirmation of the APA standard of review. 

Although not required to do so by statute, the Department of 
the Interior commendably makes use of notice-and-comment rule- 
making procedure, both for adoption of regulations to be codified 
in the Code of Federal Regulations and for actions withdrawing 
public lands from use under the various public land laws, in- 
cluding the mining laws. Public participation in such rulemaking, 
however, is substantially impaired by the lack of ready access to 
geologic data and other Government-developed data and views 
relating to rulemaking proposals. Moreover, other information 
important to the public, pertaining to matters of law, policy, pro- 
cedure and Departmental organization, is not available as readily, 
or in as comprehensible a form, as it should be. Part C of the 
present Recommendation suggests requirements to render the 
Department's rulemaking process more effective and to facilitate 
citizen receipt of needed information. 


1. Whether it is achieved separately or in conjunction with 
more general mining law reform, mandatory Federal registration 
of claims and records of required assessment work is important 
for sound management of the public domain. The Congress should 
enact legislation to impose that requirement ; and the Department 
should consider whether it may impose such a requirement under 
its existing rulemaking powers and management authority over 
the public lands. 

2. Pending the implementation of mandatory registration pro- 
cedures, the Department should afford facilities for voluntary 


federal registration of claims by persons who wish to be assured 
personal notice of governmental actions possibly affecting their 
interests. Moreover, when clear title must be established for 
particular tracts of public domain during this period, fairness 
permits and efficiency demands that the Department adopt pro- 
cedures which require the unknown owners of the claims, or the 
holders of unknown claims, to identify themselves and their 
claims before any more formal government action can be called 
for. Procedures for identifying claims, modeled on those specified 
in the Multiple Mineral Use Act of 1954 and the Surface Re- 
sources Act of 1955, should include the following : 

a) The search for claims and claimants should be limited 
to what can be readily discovered by visual inspection of the 
land, by limited inquiry in the vicinity, by listing in tract 
indexes, and by reference to the Department's own records and 

b) Personal notice should be given only to those claimants 
thus discovered ; otherwise, notice may be effected by posting 
the land and by appropriate publication. 

c) All persons wishing to assert the validity of claims 
affecting the lands in question should be required to file veri- 
fied statements with the Department precisely identifying 
themselves, their claims, and other parties in interest. 

d) Claims not asserted within a reasonable period of time 
should be deemed abandoned. 

B. Hearing and Review Procedures 

1. The Department should by rule require that once the Govern- 
ment initiates proceedings to determine the validity of mining 
claims located on particular tracts of public land, claimants must 
specify all matters necessary to establish this validity — in par- 
ticular, what discovery of valuable mineral is claimed, with sup- 
porting geological and economic information. Until such matters 
are specified, the claimant has not established a basis for a fact- 
finding hearing; failure to make adequate specification should 
subject the claim to summary judgment declaring its invalidity. 
In the administration of this rule, the Department should take 
measures to protect the interests of smaller prospectors, acting in 
good faith, who may not be financially able to provide full techni- 
cal data regarding their claims. Such measures might include 


joint inspection and assay using government experts (once the 
nature and points of discovery asserted are identified and ade- 
quately defined), and reliance upon the resulting reports as ade- 
quate to support summary judgment in accordance Vi^ith their 
conclusions of fact, 

2. Because the nature and quality of his claim is a matter 
uniquely v^ithin his knowledge, the claimant should be made to 
bear the burden of going forward as well as the burden of proof 
in any fact-finding hearings. Moreover, the Department should 
make clear by rule that where such hearings prove brief and the 
issues of fact or law involved prove simple, the presiding ad- 
ministrative law judge has the authority to decide the case im- 
mediately from the bench upon conclusion of the hearing and 
receipt of argument, without need to await the transcript or 
written briefs. 

3. Effectively conferring final decision-making authority upon 
the Board of Land Appeals risks a bifurcation of the Depart- 
ment's policymaking function. The Department should adopt 
measures that will reconcile the appropriate adjudicative role of 
the Board with the Secretary's policymaking responsibility. 

4. The Congress should enact legislation which would help to 
bring the adjudicative procedures of the Department into line 
with usual administrative practice: 

a) by conferring on the Bureau of Land Management dis- 
covery authority commensurate with that enjoyed by most 
federal agencies; and 

b) by explicitly providing for review of the final agency 
decision in adjudicated cases in the appropriate Court of 
Appeals under the Administrative Procedure Act, with "sub- 
stantial evidence" review of findings of fact. 

C. Rulemaking Procedures — Public Information 

1. The Department's rulemaking procedures should be im- 
proved and the availability of its information to the public in- 
creased by various means, including: 

a) Adoption of procedures providing interested parties 
adequate opportunity to inspect and to comment upon geologic 
data and other Government-developed data or views relating 
to a pending rulemaking proposal and otherwise available 


under the Freedom of Information Act, 5 U.S.C. §552. This 
may require extension of the ordinary comment period. 

b) Reduction of the number and complexity of law-sources 
which must be consulted to determine governing law and 
authority within the Department. Matters substantially affect- 
ing the public, but now incorporated in staff manuals or other 
internal documents, should be included in the published regu- 
lations, and policies generated through the adjudicatory 
process should be codified in regulations periodically. In addi- 
tion, the Bureau of Land Management should publish regu- 
larly, in the Code of Federal Regulations and in pamphlet 
form, a full and current description of its central and field 
organization, showing lines of authority, and a full and cur- 
rent description of its operating procedures for dealing with 
mining matters, including the full requirements for patent 



(Adopted May 30-31, 1974) 

With increasing frequency, rules of general applicability 
adopted by agencies informally pursuant to 5 U.S.C. §553 are 
being reviewed by the courts directly, before they are applied to 
particular persons in adjudicative proceedings. Such review may 
be by courts of appeals under statutes, mostly older statutes, 
providing generally for judicial review of orders of specific agen- 
cies, or under recent statutes providing specifically for the direct 
review of rules issued by new agencies or by newly created 
authority. The district courts also review rules directly in the 
exercise of their power under the Administrative Procedure Act 
to review agency action not otherwise reviewable. 

The trend toward immediate review of agency rules has been 
accompanied by confusion over the appropriate scope and stand- 
ard of review. In particular, conceptual and practical difficulties 
have arisen from the use by Congress and the courts of phrases 
such as "hearing," "record" and "substantial evidence on the 
record as a whole," traditionally associated with review of orders 


entered after a formal evidentiary hearing, in the new and differ- 
ent context of preenforcement review of agency rules adopted 

This Recommendation, addressed to Congress, the Judicial Con- 
ference and the agencies, seeks to dispel the confusion by (1) 
stating what administrative materials should be included in the 
record on review and (2) clarifying the standards for reviewing 
the adequacy of the factual basis and rationality of rules. The 
Recommendation accepts the present pattern of preenforcement 
review of rules and does not call for either more or less of such 
review. Nor does it suggest that any particular procedures should 
be followed by agencies in adopting rules. 


1. In the absence of a specific statutory requirement to the 
contrary, the following are the administrative materials that 
should be before a court for its use in evaluating, or preenforce- 
ment judicial review, the factual basis for rules adopted pursuant 
to informal procedures prescribed in 5 U.S.C. §553: (1) the 
notice of proposed rulemaking and any documents referred to 
therein; (2) comments and other documents submitted by in- 
terested persons; (3) any transcripts of oral presentations made 
in the course of the rulemaking; (4) factual information not 
included in the foregoing that was considered by the authority 
responsible for promulgation of the rule or that is proffered by 
the agency as pertinent to the rule; (5) reports of any advisory 
committees; and (6) the agency's concise general statement or 
final order and any documents referred to therein.* References 
to the "record" or "whole record" in statutes pertaining to judi- 
cial review of rules adopted under Section 553 should be construed 
as references to the foregoing in the absence of a legislative in- 
tent to the contrary. The Conference does not assume that the 
reviewing court should invariably be confined to the foregoing 
materials in evaluating the factual basis for the rule. 

2. The term "substantial evidence on the record as a whole," 

• The court may of course limit its consideration to those materials that parties 
cite. Whether the agency may withhold from the parties to the judicial review pro- 
ceeding or the court on the ground of confidentiality any materials otherwise called 
for is left by the recommendation to be decided under existing law. 


or comparable language, in statutes authorizing judicial review 
should not, in and of itself, be taken by agencies or courts as 
implying that any particular procedures must be followed by the 
agency whose actions are subject to the statute and, in particular, 
should not be taken as a legislative prescription that in rule- 
making, agencies must follow procedures in addition to those 
specified in 5 U.S.C. §553. 

3. The appropriate standard for determining whether a rule 
of general applicability adopted after informal rulemaking rests 
on an adequate foundation is stated in 5 U.S.C. §706(2) (A), 
which provides that a reviewing court must set aside action found 
to be "arbitrary, capricious, [or] an abuse of discretion." Where 
such a rule is attacked on the ground that an asserted factual 
basis does not support it or that a necessary factual foundation is 
lacking, this standard requires a reviewing court to decide, in 
light of the information before it (including the administrative 
materials described in paragraph 1), whether the agency's con- 
clusions concerning the significance of factual information can 
be said to be rationally supported. 

4. Statutes providing for judicial review of rules adopted after 
informal rulemaking should refer only to the standards for re- 
view of such rules set forth in 5 U.S.C. §706, including the 
"arbitrary, capricious, [or] abuse of discretion" standard of 
Section 706(2) (A) (but not including the "substantial evi- 
dence" standard of Section 706(2) (E), which by its terms is 
inapplicable to such rules). Properly applied, those standards are 
adequate to ensure appropriate judicial scrutiny of rules adopted 
informally. Judicial review statutes that speak in terms of review 
according to the standard of "substantial evidence" should be 
construed as establishing a standard of review over informal 
rulemaking comparable to that set forth in Section 706(2) (A), 
unless a contrary intent clearly appears. 

Statement of Malcolm S. Mason 

The debate on this Recommendation demonstrates that there 
are large differences of fundamental approach on many interre- 
lated underlying issues. Under these circumstances. Professor 
Verkuil's paper, the Committee study, and the Conference debate 
have served a useful purpose in calling attention, in this in- 


fluential forum, to the need for further thought on these matters. 
They do not, however, lay a rational foundation for a specific, 
formal, intricately constructed Recommendation, which purports 
to carry the authority of the Administrative Conference. Here the 
real disagreements have been hidden by the parliamentary 
process; that can only be harmful. This kind of rush to recom- 
mend is something I think the Conference should scrupulously 


(Adopted June 7-8, 1973) 

In August, 1970 the House of Delegates of the American Bar 
Association adopted twelve resolutions calling in general terms 
for amendments to the Administrative Procedure Act. They are a 
valuable means of focusing the attention of the Administrative 
Conference, the organized bar, and other interested persons upon 
revisions and improvements in the APA suggested by a quarter- 
century of experience. 

The Conference has studied the resolutions and the imple- 
menting recommendations prepared by the Administrative Lav^' 
Section of the ABA. The Conference has expressed its views in 
recommendations previously adopted respecting the subject mat- 
ter of several of the resolutions. We believe it desirable, however, 
to state in a single document our views on the resolutions and on 
those parts of the implementing recommendations which appear 
to raise issues separate from those posed by the resolutions. 

Resolution No. 1 

The Conference approves in principle Resolution No. 1, calling 
for improved definitions of "rule" and "order" so as to distinguish 
clearly between the nature of rulemaking and the nature of adju- 
dication. The Conference has commenced, and will continue, the 
further study that is needed to determine how this can most 
effectively be achieved. 

Resolution No. 2 

The Conference agrees with Resolution No. 2. We have previ- 
ously called for eliminating from 5 U.S.C. §553 the exemption 
for rules relating to "public property, loans, grants, benefits, or 
contracts" (Recommendation No. 69-8). We also favor limiting 
or eliminating the present exemption that applies whenever a 
military or foreign affairs function is involved, provided that 
appropriate safeguards can be retained to protect the aspects of 



those functions that concededly need special treatment. This 
subject deserves further study, which the Conference has already 

Resolution No. 3 

Resolution No. 3 would extend the existing provisions regarding 
separation of functions in 5 U.S.C. §554 (d) to all formal pro- 
ceedings, both adjudicatory and rulemaking; the existing excep- 
tions for ratemaking, initial licensing and formal rulemaking 
generally would be eliminated. With respect to such formal pro- 
ceedings, the Conference approves this proposal insofar as it 
applies to agency staff who have actually engaged in investigative 
or prosecutorial functions in the particular proceeding, including 
persons who have actually exercised supervisory authority over 
such functions once the formal phase of the proceeding has com- 
menced. We do not believe, however, that agency officials having 
general organizational or supervisory responsibility for such 
functions should, solely by virtue of that responsibility, be barred 
from performing their customary function of advising agency 
members in proceedings not presently covered by 5 U.S.C. §554 (d) . 

Resolution No. 4 

The Conference approves the purpose of Resolution No. 4, 
which seeks the prohibition of ex parte communications between 
agency members and parties or other interested persons outside 
the agency on any fact in issue in an adjudicatory or rulemaking 
proceeding subject to 5 U.S.C. §§556 and 557. We leave open for 
further consideration by the Council and cognizant committees 
whether this objective can most effectively be sought by legisla- 
tion or by agency rules. 

Resolution No. 5 

As the numerous Conference recommendations of general ap- 
plicability indicate, the Conference endorses the principle of 
uniformity of administrative procedures — including procedures 
governing the conduct of formal adjudication — where considera- 
tions of fairness or expedition do not justify differences. It is 
extremely difficult to determine, however, where such considera- 
tions are widely applicable without an intensive agency-by-agency 


examination of the particular procedure in question. As a matter 
of priority, the advantages to be gained by seeking standardiza- 
tion through agency-by-agency examination of a procedure whose 
only apparent flaw may be its nonuniformity are not always as 
important as improvement of some procedures whose actual 
operation has been shown to be defective. The work involved, and 
hence the opportunity cost, becomes even greater if the uniform 
procedure is to be not merely recommended but imposed, making 
it necessary to pass upon exceptions for particular agencies. For 
these reasons, the Conference would not desire a statutory man- 
date to enforce the single goal of uniformity with respect to 
particular provisions of administrative law, but would prefer to 
further, as it has in the past, all the values of sound administra- 
tive procedure — including the value of uniformity — by making 
recommendations in those areas where the need and the utility of 
Conference action are most apparent. 

Resolution No. 6 

The Conference has already called for agencies to consider 
delegating final decisional authority to presiding officers or to 
intermediate appellate boards, subject to discretionary review by 
the agency (Recommendation 68-6). ABA Resolution No. 6 and 
that part of its Recommendation No. 8 which authorizes such 
delegation are consistent with and would implement the Con- 
ference recommendation, and we endorse them. 

Resolution No. 7 

Resolution No. 7 would require agencies "to the extent prac- 
ticable and useful" to provide by rule for prehearing conferences. 
The Conference has already endorsed the principle objective of 
this resolution, which is increased use of prehearing conferences 
in adjudicatory proceedings (Recommendation 70-4). We agree 
with the conclusion expressed in ABA Recommendation No. 7 
that pursuit of this objective is best conducted through the 

Resolution No. 8 

The Conference agrees that the presiding officer should have 
substantial authority in the conduct of adjudicatory proceedings. 


The Conference has already recommended legislation to authorize 
agencies, at their discretion, to accord administrative finality to 
the decisions of administrative law judges (Recommendation 
68-6) . We endorse the ABA proposal insofar as it would achieve 
that result. 

The Conference shares the Association's view that an Adminis- 
trative Law Judge who has presided over the reception of evi- 
dence should exercise responsibility for rendering the initial 
decision, with limited exceptions. The specification of those ex- 
ceptions and other matters set forth in the ABA's implementing 
recommendation raise issues which the Chairman's Office of the 
Conference and the Committee on Agency Organization and Per- 
sonnel have studied in some depth and discussed with the relevant 
committee of the Administrative Law Section of the ABA. Since 
further study and discussion would be fruitful, the Conference 
takes no position on these matters at the present time. 

Resolution No. 9 

Resolution No. 9, as elaborated upon by its implementing 
recommendation, calls for legislation authorizing agencies to pro- 
vide by rule for abridged on-the-record procedures for use by 
unanimous consent of the parties. We do not believe that such 
legislation would accord the agencies any authority they do not 
already possess, and it might be construed to invalidate certain 
procedures at present employed in the absence of unanimous con- 
sent. Accordingly, we recommend against implementation of this 

Resolution No. 10 

Resolution No. 10 would grant all agencies authority to make 
subpoenas generally available in adjudicatory proceedings. Those 
agencies which conduct adjudications subject to 5 U.S.C. §§554, 
556 and 557 or otherwise determined on the record after hearing 
should, as a general rule, possess subpoena power, and subpoenas 
should be available to the parties in such proceedings. We favor 
an amendment to the Administrative Procedure Act which would 
achieve this result with respect to adjudications subject to §§554, 
556 and 557. It is not feasible or desirable, however, to make 
subpoenas available to either the agencies or the parties in every 
case of informal adjudication. Thus, amending the Administra- 
tive Procedure Act to provide a grant of subpoena power in ap- 


propriate cases of informal adjudication will require a definition 
of the category of proceedings to be covered; since framing a 
workable definition is exceedingly difficult, it may be found prefer- 
able for Congress to make such grants of subpoena power on a 
less general basis. In any event, we favor retention of that pro- 
vision of the Administrative Procedure Act (5 U.S.C. §§555 (d)) 
which permits the agencies to require by rule a statement or 
showing of general relevance and reasonable scope of the evi- 
dence sought before inssuance of a subpoena. 

Resolution No. 11 

The Conference agrees in principle with the proposal that 
agencies be required to provide by rule the procedure applicable 
to cases of informal adjudication. We are convinced that in view 
of the vast range of informal agency adjudication, more empirical 
study is necessary before sound procedures of general appli- 
cability can be formulated. 

Resolution No. 12 

The Conference does not favor at this time amending the 
Administrative Procedure Act to treat agency issuance of preju- 
dicial publicity. We believe that there exists at present an ade- 
quate legal remedy for agency publicity which affects the integrity 
of an on-the-record agency proceeding. We agree with the Ameri- 
can Bar Association that agency practices in the issuance of 
publicity adversely affecting persons in their businesses, property 
or reputations also present a problem, and we have proposed in 
our Recommendation 73-1 means of dealing with it. 

Statement of Max D. Paglin, Earl W. Kintner, Anthony L. 
Mondello, William A. Nelson, Charles F. Bingman and John 
H. Powell, Jr. 

The above-named members of the Committee on Agency Or- 
ganization and Personnel are of the opinion, for the reasons set 
forth in the Staff report accompanying the proposed Recommen- 
dation, that the Conference's position on Resolution No. 3 of the 
ABA Proposals (Separation of Functions) should be in the form 
and language originally submitted by the Council and various 
committees, to wit: 


Resolution No. 3 

Resolution No. 3 would extend the existing provisions regarding separa- 
tion of functions in 5 U.S.C. §554 (d) to all formal proceedings, both 
adjudicatory and rulemaking; the existing exceptions for ratemaking, 
initial licensing, and formal rulemaking generally would be eliminated. 
With respect to rulemaking of particular applicability, all ratemaking, 
and initial licensing, the Conference approved this proposal insofar as it 
applies to agency staff engaged in investigative or prosecutorial functions, 
including the actual exercises of supervisory authority over such functions 
in a particular case. We do not believe, however, that agency officials 
having general organizational or supervisory responsibility for such 
functions should, solely by virtue of that responsibility, be barred from 
performing their customary function of advising members in proceedings 
not presently covered by 5 U.S.C. §554 (d). With respect to rulemaking of 
general applicability, the Conference believes there should be no statutory 
requirement of separation of functions. 

Statement of Malcolm S. Mason 

I join in the above statement of Max D. Paglin and other 
named members of the Committee on Agency Organization and 
Personnel, except that I favor that portion of the Assembly's 
amendment to the original submission which would permit con- 
sultation with staff members whose exercise of supervisory 
authority occurs prior to commencement of the formal phase of 
the proceeding. More generally, I am of the view that various 
portions of the Conference's Statement concerning the ABA pro- 
posals overemphasize notions of formal neatness at the expense 
of realistic examination of the actual problems encountered in 
actual agencies in various kinds of proceedings. 


(Adopted December 19, 1973) 

The Conference agrees with Resolution No. 1, calling for im- 
proved definitions of "rule" and "order" so as to distinguish 
more dearly between the nature of rulemaking and the nature 
of adjudication; it endorses the recommendation of the ABA that 
the words "or particular" and the entire second clause be deleted 
from the definition of "rule" in the Administrative Procedure 
Act. The Conference endorses this proposal upon the express 
understanding that — 

(1) A matter may be considered to be of "general appli- 
cability" even though it is directly applicable to a class which 
consists of only one or a few persons if the class is open in the 
sense that in the future the number of members of the class may 
be increased. Thus, for example, smoke emission standards for 
a particular area are of general applicability even though at the 
time of their issuance they may, as a practical matter, be ap- 
plicable to only one plant. On the other hand, a rate established 
for a single company on the basis of the capital requirements 
and credit rating of that company, and applicable only to that 
company, would be a matter of particular applicability and an 
order rather than a rule. 

(2) A matter may be of "particular applicability" (and there- 
fore an order) even though it is applicable to several persons, if 
the agency clearly specifies an intention to limit its applicability 
to the particular persons concerned. 

(3) The deletion of the second clause does not imply a de- 
termination that the agency statements therein listed are not 
rules, but rather that they may be either rules or orders, depend- 
ing upon their applicability and effect. If such statements become 
orders under the revised definition and are required by statute 
to be determined on the record after opportunity for agency hear- 
ing, the Conference believes that in the absence of a specific 
determination by Congress to the contrary they should be treated 

• For the original Conference action on this and other ABA Resolutions to amend 
the APA, see 1972-73 Report of the Administrative Conference of the United States, 
pp. 49-53. 



in the same manner as suggested for ratemaking in the next to 
last paragraph of this Recommendation, and that amendments 
of the Act necessary to achieve these results should accompany 
the proposed redefinition of "rule." 

(4) The proposed change in the definition of "rule" does not 
affect the precedential value of an agency's decision in a matter 
of particular applicability if the agency decides to proceed on a 
case-by-case basis rather than by rulemaking. 

(5) This change is not intended to affect recommendations 
previously made which urge — 

(a) The use of notice-and-comment procedures when con- 
sidering issues of general applicability that may arise in the 
context of an adjudicatory proceeding (Recommendation 
71-6) ; 

(b) The use of trial-type or similar procedures when con- 
sidering issues of specific fact in the context of a rulemaking 
proceeding (Recommendation 72-5) ; and 

(c) Articulation and continual review of agency policies 
through rules, precedents and policy statements (Recommen- 
dation 71-3). 

In endorsing the proposed redefinition, the Conference does not 
imply that a formal proceeding fixing the permissible rates of a 
specific enterprise — the agency activity principally affected — 
should be treated in all respects like other formal adjudication. 
To the contrary, we believe that ratemaking, like initial licensing, 
should receive special treatment with respect to the separation 
of functions requirements of 5 U.S.C. §554 (d), as set forth in the 
Conference Statement concerning ABA Resolution No. 3 ; that 
ratemaking should not be subject to the mandatory initial de- 
cision requirement of 5 U.S.C. §557 (b) and should continue to 
be governed by the provision of 5 U.S.C. §556 (d) authorizing 
agencies to require that evidence be submitted in writing. 
Amendments of the Act necessary to achieve these results should 
accompany the proposed redefinition of "rule." 

The question of appropriate procedures for informal adjudica- 
tion is a subject deserving further study. Meanwhile, we recom- 
mend that agencies continue, despite the reclassification, to give 
informal action of particular applicability and future effect at 
least the same procedural protections that are now in fact ac- 

The principal purpose of the suggested changes is definitional 
and prospective rather than operational and retrospective. That 
is, they are intended to provide a clearer definitional structure 


that will facilitate proper allocation of procedures with respect 
to legislation adopted in the future or new activities undertaken 
under existing law ; they are not aimed at the correction of what 
are thought to be existing abuses. Accordingly, to the extent any 
agency believes that activities currently conducted as rulemaking 
would be adversely affected by the conversion which the ABA 
proposal would effect, it would not be inconsistent with the Con- 
ference's Statement to propose special procedural provisions 
therefor, so long as the integrity of the definition of "rule" (as 
here set forth) is not affected. 


(Adopted May 30-31, 1974) 

The previously approved statement of the Conference on ABA 
Resolution No. 8, 38 Fed. Reg. 16839, 16841 (1973) is withdravi^n 
and the following substituted : 

Resolution No. 8 

The general language of Resolution No. 8 raises a number of 
considerations, w^hich the Conference speaks to as follows : 

a. The Conference agrees that the presiding officer should 
have substantial authority in the conduct of adjudicatory pro- 
ceedings. It has already recommended that agencies be author- 
ized, at their discretion, to accord administrative finality to the 
decisions of administrative law judges (Recommendation 68-6). 
We endorse the ABA proposal insofar as it would achieve that 

b. Where final decision is to be made by the agency itself, an 
intermediate decision to which the parties may file exceptions 
serves to narrow and focus the issues, whether of fact, law or 
policy. Moreover, where the case significantly involves questions 
of fact that hinge upon credibility and demeanor, an intermediate 
decision by the presiding officer is the only means of obtaining a 
judgment on these factors. Accordingly, it is ordinarily highly 
desirable that there be an intermediate decision, even when there 
is no disputed issue of fact. 

c. In all cases of formal adjudication other than initial licens- 
ing, both of the foregoing reasons usually apply with full force, 
and an intermediate decision by the administrative law judge 
should, as under present law, be required absent unanimous 
waiver by the parties. 

d. In ratemaking, initial licensing and rulemaking, fact issues 
turning upon credibility and demeanor are -not often central. 
Since the need for expedition may outweigh the value of an 
intermediate decision in some such proceedings, agencies should 
be authorized to omit the intermediate decision, either on a case- 
by-case basis or by a determination applicable to a specifically 



defined category of proceedings. In other such proceedings it may 
be useful for the agency to supply for party comments its own 
tentative decision or the recommended decision of a responsible 
agency employee other than the presiding administrative law 




73-1 through 74-4 



(As published in: Harvard Law Review, Vol. 86, No. 8 (June, 1973)). 


Ernest Gellhorn "^ 

WHEN the Government focuses adverse publicity on named 
parties, the consequences to such parties can be disastrous. 
Perhaps the most notorious examples of governmental abuse of 
adverse publicity occurred during the McCarthy era, when press 
releases and congressional committee hearings assailed with legal 
impunity the patriotism and integrity of many persons. Publicity 
released by administrative agencies can also have a devastating 
impact; in extreme instances, such as the Food and Drug Admin- 
istration's announcement of botulin in certain cans of Bon Vivant 
soup,^ agency publicity can financially ruin the affected party. 

"Adverse agency publicity," as used in this Article, refers to 
affirmative measures taken by an agency which, by calling public 
attention to agency action, may adversely affect persons identified 
in the publicity. Agencies may or may not intend their publicity 
to have an adverse impact. In the Bon Vivant case, the Food and 
Drug Administration was chiefly concerned with warning the 
public of an imminent threat to life. In other cases, agencies such 
as the Equal Employment Opportunity Commission - or the Cost 
of Living Council '^ have used adverse publicity in the absence of, 
or in preference to, statutorily-authorized enforcement powers. 
The effect of both uses of adverse publicity is, however, the same: 
a deprivation is imposed on the affected party, without articu- 
lated standards or safeguards.* 

* Professor of Law, University of Virginia. B.A., University of Minnesota, 
1956; LL.B., 1962. 

This Article is based on a report prepared for the Administrative Conference 
of the United States, which was also the basis for Conference Recommendation 
No. 73-1 (adopted June 8, 1973), reprinted in 41 U.S.L.W. 2684 (June 19, 1973). 

* See p. 1413 & note 134 infra. 

^ See pp. 1398-401 infra. 

^ See pp. 1403-06 infra. 

" Adverse agency publicity is somewhat akin to prosecutorial discretion, which 
has captured center stage in the study of informal discretion. See, e.g., K. Davis, 
Discretionary Justice: A Preliminary Inquiry (1969); Sofaer, Judicial Con- 
trol of Informal Discretiotiary Adjudication and Enforcement, 72 Colum. L. Rev. 
1293 (1972). In fact, the publicity decision is indistinguishable from prosecu- 
torial discretion in the sense that most administrative agencies have neither de- 
veloped nor even considered criteria for determining the proper scope and nature 
of adverse publicity. 



The first part of this Article is a survey of the uses of ad- 
verse publicity by administrative agencies, based on an empiri- 
cal study of the publicity practices of particular agencies. Part 
I draws on interviews with agency staff and "victims" of ad- 
verse publicity,"' on perusal of numerous press releases and dis- 
tribution lists, on observation of news conferences and back- 
ground briefings, and on analysis of agency regulations. Part II 
suggests that many problems created by adverse publicity can be 
ameliorated by expressly developing agency policy through rules 
and practices which guide agency discretion in choosing when 
and how to issue adverse publicity. The Article also discusses the 
possibilities for external control by means of judicial review and 
statutory reform when internal controls prove inadequate. 

I. The Uses of Adverse Agency Publicity 
A. The Various Roles of Adverse Publicity 

Administrative agencies use adverse pubHcity for several 
reasons. Publicity may inform the public as well as regulated 
parties about the agency's mission, poHcies, and performance; 
it may warn the public of imminent harm; and it may serve to 
punish or deter law violations." 

/. Information and Warning. — The primary function of 
agency publicity is to announce administrative policy or action. 
Its rationale is generally stated as "the public's right to know." 
More particularly, such agency publicity seeks to inform the 
public and regulated persons about government programs and 
policies so that they can use this information substantively (as 
direct users) or politically (as voters). Authoritative agency pub- 
licity may call information to public attention when it would 

Adverse agency publicity, on the other hand, should be distinguished from an 
agency's decision to pjermit public access to its records, which is governed by 
separate criteria contained in the Freedom of Information .\ct, 5 U.S.C. § 552 
(1970). See pp. 1421-23 infra. See generally Note, The Freedom of Information 
Act and the Exception for Intra-Agency Memoranda, 86 Harv, L. Rev. 1047 (1973). 

^ Many of the -insights in this Article concerning internal agency policies are 
gleaned from interviews with agency personnel who will not be cited in order to 
protect confidences and facilitate future investigations. When this is the case, no 
authority will be given and reliance must be placed upon the scope and thorough- 
ness of the author's research, the accuracy of the responses he received, and, of 
course, his integrity. 

^ Such categorization does not, of course, imply mutual exclusivity. One re- 
lease of publicity may fall into both categories. Moreover, this Article analyzes 
only adverse uses of publicity ; many issuances of publicity, particularly where 
they are informational, are unlikely to have a significant adverse impact. 


Otherwise be ignored. In addition, publicity assists administrative 
enforcement, since regulated parties are likely to comply once 
informed of agency policy. Furthermore, publicity may aid ad- 
ministrative efficiency, since one news release or conference may 
anticipate questions which the media or others would ask. And 
fairness is served by providing advance notice to those affected 
by agency policy. 

One aspect of agency dissemination of information deserves 
special attention: a major function assigned many agencies is to 
warn the public of imminent harm to health and safety, of lurking 
danger to individual economic well-being, or of failure to observe 
other statutory standards. To the extent that this warning role 
is controversial, it is only because of the possibility of additional, 
unmerited harm to the subjects of the warning.'^ It is generally 
accepted that warnings of serious and imminent physical or 
economic harm are desirable and necessary. The problem is de- 
termining when the seriousness or imminence of harm to the 
public justifies the risks inherent in the use of adverse publicity. 

2. Sanction. — Much agency publicity identifying individuals 
or firms and thus hkely to have an adverse impact is intended only 
to warn or inform the public; the harm occurs because public- 
ity is a "gross" informational or warning tool. Occasionally pub- 
licity which informs or warns also functions to punish law vio- 
lators, to deter unlawful conduct, or to force a transgressor to 
negotiate and settle. In such cases, the adverse publicity func- 
tions as a sanction.^ Infrequently, agency publicity is issued 
solely for its sanctioning effect.^ When the adverse impact is 
ancillary and unintended, the harm to the named individuals or 
firms is a cost of obtaining the information and warning benefit 
quickly and cheaply. When the impact is ancillary and intended, 
the harm may be offset by the need to protect the public; often 
other measures, if any, would be ineffective. Adverse publicity 
designed solely as a sanction may ultimately protect the public, 
but it does not carry the additional weight supporting publicity 
designed also to inform or warn. 

''See, e.g., p. 1413 & note 134 infra (FDA warning about Bon Vivant vichys- 
soise) . 

* The coercive effect, if any, of agency publicity depends on four factors: (1) 
the degree to which the public disapproves the conduct being condemned; (2) the 
importance of a good reputation to the person or firm against whom the publicity 
is directed; (3) the extent to which the adverse public impact will affect conduct 
beyond respondent's offensive activity; and (4) the likelihood that adverse agency 
publicity will reach the public. 

^ See, e.g., pp. 1398-401 infra (discussion of EEOC). On rare occasions such 
publicity is malicious and issued solely for the purpose of injuring the named 
party. Cf. Barr v. Matteo, 360 U.S. 564 (1959) (allegation of malice does not over- 
ride absolute immunity of government official from tort liability). 


B. Agency Use of Publicity to Inform and Warn 

I. The Public Health Service and the Cigarette Controversy. 
— On occasion the Public Health Service (PHS) ^" relies heavily 
on the use of adverse publicity to inform and warn the public of 
serious dangers to community health. As with the "Surgeon Gen- 
eral's 1964 Cigarette Report," ^^ its focus is likely to be on a 
particular hazard and its warning may adversely affect an entire 
industry. Admittedly, such publicity puts no individual firm at 
a competitive disadvantage, and an industry has "strength in 
numbers" that enables it to combat more vigorously the agency 
assertions. Yet the losses which may result from adverse agency 
publicity directed toward an entire industry are likely to be 
great, and concentrated public attention heightens the need for 
carefully conceived and well-articulated procedures. 

Like most administrative agencies, the PHS is not specifically 
authorized to issue adverse publicity; '- it relies on an implied 
authority to inform and warn the public about perils to public 
health. While this reliance does not seem misplaced, it does 
underscore the fact that Congress has not addressed the issue of 
PHS publicity. More serious is the fact that no HEW regula- 
tions govern publicity efforts of the type associated with the PHS 
Cigarette Report.'^ Indeed, no regulations authorized the is- 
suance of such a report in the first place. Admittedly. HEW's 
Assistant Secretary for Public Affairs has since prepared a mas- 
sive manual which sets forth bureaucratic rules governing HEW 
"communications programs." *^ This manual establishes an elab- 
orate internal review and clearance procedure for press releases 
and news conferences, seeking to assure that HEW speaks with 

'" References to the PHS in this Article are limited to comments on its re- 
sponsibility for investigating smoking, which had been in the office of the Surgeon 
General and which is currently in the Center for Disease Control of the Health 
Services and Mental Health Administration. See United States Government 
Organization Manual 1972-73, at 217 (1972). 

" Advisory Comm. to the Surgeon General of the Public Health Service, 
Smoking and Health (1964) [hereinafter cited as PHS Cigarette Report]. 

*^ The Secretary of HEW is now authorized to issue annual reports to inform 
Congress of current developments on smoking and health, and also to make legisla- 
tive recommendations. 15 U.S.C. § 1337(a) (1970), as amended, 15 U.S.C.A. § 
1337(c) (Supp. 1973). The PHS is also granted ambiguous authority to release 
information relating to pubUc health, including weekly reports on health conditions 
as well as reports of other pertinent health information. 42 U.S.C. § 247 (1970), 
as amended, 42 U.S.C.A. § 229 (Supp. 1973). 

'^ HEW regulations apply to the PHS: "[ulnified direction of [PHS' constit- 
uent public health service] agencies is the responsibility of the .Assistant Secretary 
for Health [of HEW]." United States Government Organization Manual 
1972-73, at 215 (1972). 

''' HEW, Dept. Staff Manual: Public .Affairs Management System, HEW 
TN-72.1, ch. 3-10 (1972). 


one voice. But it gives no guidance on when a news release should 
be issued, what pitfalls should be avoided, what information 
should be included, or what requirements of notice and fairness 
should be met. And although they are no longer confidential, 
staff manuals are not readily available to the public. 

Although the PHS campaign against cigarette smoking is in 
many respects sui generis, it affords an interesting illustration of 
how the exigencies of publicity can interact with and even control 
substantive policy. Government publicity first connected smoking 
with lung cancer in the mid-1950's, when the Census Bureau sug- 
gested that a drop in cigarette smoking was due to fear of lung 
cancer. Earlier antismoking publicity had been almost solely the 
work of medical journals and, later, of the American Cancer 
Society, a private nonprofit organization.^' In June 1956, a sci- 
entific study group was formed under the Surgeon General's spon- 
sorship, and after appraising sixteen studies, it concluded that a 
definite relationship existed between excessive cigarette smoking 
and lung cancer. One year later, the PHS officially concluded that 
increasing and consistent evidence had demonstrated that exces- 
sive smoking was a cause of lung cancer and undertook to edu- 
cate the public about the dangers of smoking.^'' 

The industry was not long in responding. As early as January 
1954, it had created the Tobacco Industry Research Committee 
to investigate the causes of lung cancer. During its first five years 
the committee received over $3 million in research grants and 
devoted most of its efforts to countering antismoking reports. The 
committee contended that the alleged statistical correlation be- 
tween smoking and lung cancer was insignificant and that until 
the causative agents could be identified, the case against smoking 
cigarettes could not be made.^^ 

The effectiveness of the industry's campaign spurred further 
government action. In 1962 the Surgeon General announced, with 
the President's approval, the formation of an advisory committee 
composed of "outstanding experts who would assess available 

^^ Luther Terry Glances Back, Medical Opinion & Rev., July, 1972, at 33. 

'"For recountings of the PHS effort, see PHS Cigarette Report 7-8; FTC, 
Statement of Basis and Purpose of Trade Regulation Rule for Prevention of 
Unfair or Deceptive Advertising and Labeling of Cigarettes in Relation to 
THE Health Hazards of Smoking 8-24, reprinted in 29 Fed. Reg. 8327-32 (1964) 
[hereinafter cited as FTC Cigarette Statement]. 

" For descriptions of industry counterefforts, see House Comm. on Govern- 
ment Operations, False and Misleading Advertising (Filter-tip Cigarettes) , 
H.R. Rep. No. 1372, 8sth Cong., 2d Sess. 3 (1958); Wegman, Cigarettes and 
Health: A Legal Analysis, 51 Cornell L.Q. 678, 682-83 (1966) ; Whiteside, The 
Reporter at Large — A Cloud of Smoke, The New Yorker, Nov. 30, 1963, at 67; 
Newsweek, Nov. 18, 1963, at 61-66; N.Y. Times, Jan. 4, 1954, at i, col. 6; id. 
at 15, col. 2. 


knowledge in the area (smoking and health) and make appropri- 
ate recommendations." To enhance the prestige of its findings 
and to avoid charges of PHS dominance, the advisory committee's 
independence from the PHS was noted both in government press 
releases and in the PHS Cigarette Report, which the committee 
drafted. Nevertheless, the media realistically treated the study 
as a government project. ^*^ 

What disturbed the tobacco industry more than the report's 
governmental source was the confusion surrounding the nature 
of the report and its supporting evidence. The media presented 
the PHS Cigarette Report to the public as the conclusion of a 
distinguished scientific panel which had undertaken clinical studies 
and collected new data.''' In fact, the PHS Cigarette Report was 
not based on new or independent investigations of the causes of 
cancer or of the effect of smoking on health. The advisory com- 
mittee conducted no experiments or clinical studies, collected and 
evaluated no new statistical data, and examined no smokers, non- 
smokers, or cigarettes; it merely evaluated the many earlier 
studies which had examined the relationship between smoking 
and health.-" 

Although the PHS Cigarette Report and the accompanying 
government information releases revealed the study's limited 
basis,-^ the process by which the study was conducted and the 
procedures for its release explain the misleading media cover- 
age. The committee operated in strictest secrecy during the two 
years the study was in progress. Formal meetings were held in 
an underground chamber in the bombproof Library of Medicine, 

*^ For accounts of the establishment of the committee, see FTC Cigarette 
Statement 13-24; PHS Cigarette Report 7-8. See also Greenberg, Tobacco and 
Health, PHS Sets Up Rules for Study Committee, 137 Sex. 328 (1962). 

^^ See, e.g., Newsweek, Jan. 20, 1964, at 48-50; Washington Post, Jan. 12, 
1964, at I, col. 5. But see N.Y. Times, Jan. 12, 1964, at i, col. i. 

^" This was no small undertaking, and the tobacco industry cooperated in 
supplying the committee with "favorable" reports. Thousands of articles on smoking 
and health were reviewed, and the report is a summary of the findings and studies 
which the committee accepted. 

A scientific study which examines and evaluates a large group of prior studies 
may be a major event, since drawing together the results of previous experiments 
will often support new and stronger statements. The difficulty of making such an 
argument about the PHS Cigarette Report is that many of the supporting studies 
had already sought to link the prior literature, and some of the earlier analyses which 
were not constrained by a "committee format" seemed more persuasive than the 
PHS Cigarette Report. Even more serious is the fact that the report made no 
significant effort to fill in data gaps or to validate critical results where the evidence 
was not corroborated or the conclusions were questionable. The PHS Cigarette 
Report, therefore, is more properly described as a major political or public relations 
event in the regulation of cigarettes than as a scientific breakthrough. 

^' See PHS Cigarette Report 1-8. 


and special keys were needed to operate the elevators leading to 
the meeting room. The committee secured its records in locked 
subterranean vaults and refused to entrust the combinations to 
any single committee member. When publishing the committee's 
findings, the Government Printing Office followed the rules gov- 
erning classified documents. The report itself was released in a 
dramatic manner. Prepublication stories about its contents, some 
traceable to PHS officials, were circulated. The report was for- 
mally released on a Saturday, traditionally a slow news day, ap- 
parently to obtain maximum coverage in widely-read Sunday pa- 
pers. Finally, "presidential" rules were imposed on the release of 
the report: each reporter received a copy as he entered the con- 
ference room and was allowed to read it, but he was then obliged 
to remain for the news conference. Afterwards the newsmen, in 
Surgeon General Terry's words, "virtually exploded" from the 
auditorium to get the news out. In light of this melodramatic 
setting, it is not surprising that newsmen lost sight of the nature 
of the report or its limited basis. Many members of the public 
were thus led to believe that the PHS Cigarette Report contained 
important new evidence which conclusively "proved" that ciga- 
rette smoking caused cancer. 

PHS secrecy together with occasional leaks of stories — some- 
times on the secrecy itself — functioned to build public interest 
and to create an aura of invincibility which obscured the report's 
limitations.-- The secrecy was designed to increase the report's 
visibility and stature, but it was accomplished by sales efforts 
which are acceptable in the marketplace but which are of doubt- 
ful legitimacy when used by a government information office. And 
it was done at the "expense" of a substantial industry; cigarette 
sales slumped sharply after the report was released in ig64.''^ 

Of course, this result was consistent with PHS policy aims. 
PHS had created the study committee and sponsored the report 
in order to warn the public of imminent peril to its health, and 
the report concluded that the public health was endangered by 
cigarette smoking. The adversely affected industry was given 
"due process rights" including an opportunity to be heard: it sug- 
gested members for the study panel and exercised a practical veto 
over some appointments; it presented evidence by submitting re- 
ports and commenting on others; and the adverse publicity did 
not issue until the agency had made a thorough decision based on 
all the available evidence. Thus, one might argue that at worst 
the false impression created by the PHS publicity procedures was 

^^ See Luther Terry Glances Back, supra note 15. 

^^ See Tobacco Research Council, Tobacco' Consumption in Various Coun- 
tries, Research Paper No. 6, at 64 (2d ed. D. Beese 1968). 


"harmless error," and that at best it was an act of statesmanship 
resulting in substantial public benefit. This argument, of course, 
depends primarily on one's agreement with the report's underly- 
ing findings. But even one who agrees with the aims of the PHS 
and its report -* must be troubled by its deliberate attempt to 
oversell a narrow product. 

The PHS Cigarette Report episode thus raises many of the 
issues involved when an agency uses adverse publicity to inform 
or warn. The PHS does not have law enforcement duties and 
its publicity was not designed as a threat or intended as a sanction. 
The publicity was intended solely to warn and inform and yet it 
had significant adverse effects on the industry involved. 

2. The Federal Trade Commission. — It is not surprising that 
the Federal Trade Commission (FTC), as the procedural "point 
man" of federal administrative law, has developed the most so- 
phisticated publicity policies and practices of the regulatory and 
executive agencies examined in this study. Its authority to issue 
press releases has been questioned and upheld,^^ and its policies 
are carefully articulated in continually evolving agency rules, 
manuals, and guidebooks.^'' 

In general, FTC publicity policy is both sensible and sensitive. 
Although still subject to considerable external criticism and not 
immune from embarrassing mistakes, its policies represent a 
thoughtful attempt to balance administrative efficiency, the pub- 
lic's need for warning, and private interests. The FTC public 
information office has prepared a pamphlet fully advising Com- 
mission personnel and outsiders about its publicity pohcies,^' 
and its publicity procedures serve as a guide for other adminis- 
trative agencies. 

Early critics of the Commission challenged, on statutory and 
constitutional grounds, its right to make complaints public and to 
hold public adjudicatory hearings. ^^ These challenges were easily 
repulsed, and in light of the Freedom of Information Act -^ they 
now have a quaint ring. The more serious challenge has been to 
the Commission's practice, adopted in 19 18, of issuing a press 

^* For an expression of the author's views on the PHS Cigarette Report and on 
government regulation of cigarette advertising, see E. Gellhorn, Braking the 
Cigarette Habit, 3 J. Cons. Aft. 145 (1969). 

"5ee FTC v. Cinderella Career & Finishing Schools, Inc., 404 F.2d 1308 (D.C. 
Cir. 1968). 

^^ See, e.g., FTC, Public Information Policy Guidebook (1972) [here- 
inafter cited as FTC Publicity Guidebook]. 

2«5ee E. Griffiths Hughes, Inc. v. FTC, 63 F,2d 362, 363 (DC. Cir. 1933); 
Attorney General's Comm. on Administrative Procedure, Monograph on Fed- 
eral Trade Commission, S. Doc. No. 186, 76th Cong., 3d Sess., pt. 6, at 14 (1940). 

^^5 U.S.C. § 552 (1970); see pp. 1421-23 infra. 


release immediately upon filing a complaint,^'' copies of which 
are presently mailed to over i,ooo publications and to approxi- 
mately 2 0,000 subscribers on the FTC's general distribution list. 
Because FTC investigations of individual firms are made public 
only if they lead to the filing of a complaint, press releases ac- 
companying such complaints make up nearly all the agency's ad- 
verse publicity.^^ 

^° See, e.g., FTC v. Cinderella Career & Finishing Schools, Inc., 404 F.2d 1308, 
1310 n.3 (D.C. Cir. 1968); 1925 FTC Ann. Rep. 23; T. Blaisdell, The Federal 
Trade Commission: An Experiment in the Control of Business 83, 86-89 
(1932). But cf. Attorney General's Comm. on Administrative Procedure, 
Monograph on Securities and Exchange Commission, S. Doc. No. 10, 77th 
Cong., ist Sess., pt. 13, at 53 (1941). See also Final Report of the Attorney 
General's Comm. on Administrative Procedure, S. Doc. No. 8, 77th Cong., 
ist Sess. 135-36 (1941)- 

In Cinderella, the District of Columbia Circuit upheld the Commission's prac- 
tice of issuing a press release upon filing an adjudicative complaint. While the 
court could not point to any explicit delegation of authority, it relied upon § 5 
of the FTC Act, 15 U.S.C. § 4S(a)(i) (1970), which charges the Commission with 
eliminating unfair and deceptive business practices in order to protect the public, 
and upon § 6(f), 15 U.S.C. § 46(f) (1970), which authorizes the FTC to release 
information as it deems expedient in the public interest. From this statutory 
structure the court concluded that 

the Commission, acting in the public interest, [has authority] to alert the 
public to suspected violations of the law by factual press releases whenever 
the Commission shall have reason to believe that a respondent is engaged 
in activities made unlawful by the Act which have resulted in the initiation 
of action by the Commission. The press releases predicated upon official 
action of the Commission constitute a warning or caution to the public, the 
welfare of which the Commission is in these matters charged. 
404 F.2d at 13 14. One judge, while concurring in this reading of the FTC's author- 
ity, admonished the Commission to exercise its discretion in issuing releases. Id. 
at 1320-22 (Robinson, J., concurring). 

^' The FTC occasionally also uses publicity in conjunction with its formal 
cease-and-desist orders. That is, it requires respondents to publicize their past 
misdeeds by what is called "corrective advertising." See, e.g., ITT Continental 
Baking Co., [1970-1973 Transfer Binder] Trade Reg. Rep. ^ 19,681, at 21,727 
(F.T.C. 1971); Note, Corrective Advertising — The New Response to Consumer 
Deception, 72 Colum. L. Rev. 415 (1972); Note, "Corrective Advertising" Orders 
of the Federal Trade Commission, 85 Harv. L. Rev. 477 (1971). While it has been 
asserted that this is a publicity sanction imposed by the agency, see Lemke, Souped 
Up Affirmative Disclosure Orders of the Federal Trade Commission, 4 J.L. Reform 
180, 190-93 (1970), these orders involve the FTC's substantive enforcement powers 
under § 5 of the FTC Act. Since they are subject to judicial review and are not 
imposed prior to an adjudicative hearing, they do not raise the same issues as does 
publicity of complaints. 

Similar enforcement techniques have also been relied on by other agencies. See, 
e.g., J.P. Stevens & Co., 1971 CCH NLRB Dec. H 23,079. See also NLRB v. Express 
Publ. Co., 312 U.S. 426 (1941) (employer violating NLRA required to post com- 
pliance notice in conspicuous place) ; Bilyeu Motor Corp., 161 N.L.R.B. 982 (1966), 
enforced, 391 F.2d 928 (5th Cir. 1968). Comparable orders relating to the distinc- 
tive regulations of their agencies are also required by the Department of Agri- 
culture and the SEC. See, e.g.. In re Mickelian Sales Co., 30 Agri. Dec. 830 (1971) ; 
SEC Release No. 34-7920, 31 Fed. Reg. 10,076-77 (1966). 


The FTC rules provide for the filing of two types of com- 
plaints: one for use in consent procedures, the other for use in 
adjudicative procedures. The former, which are governed by 
Part II of the FTC's rules, are known as "Part 11" or "proposed" 
complaints. ^^ They are only tentatively approved by the Com- 
mission; before a matter in which such a complaint has been 
filed is assigned to an administrative law judge for hearing, the 
respondent is given an opportunity for extra-adjudicative settle- 
ment, usually by negotiation of a consent order. ^'^ Part II com- 
plaints are not only public documents, they are also regularly ac- 
companied by Commission-approved press releases. If a proposed 
complaint does not produce a negotiated settlement, the matter in 
which it was filed is returned to the Commission for approval and 
issuance of an "adjudicative," or "Part III," complaint. Unless 
the matter in which it is filed has for some reason escaped the 
Part II procedure and its attendant publicity, a Part III com- 
plaint is not accompanied by a press release."^^ Thus, whenever it 
first becomes a matter of public information, every FTC com- 
plaint is deliberately publicized through a press release. In par- 
ticularly significant cases, the Commission will hold a press con- 
ference as well. 

According to the FTC, routine use of press releases and fre- 
quent use of background briefings ensure accurate, fair news 
coverage. Reporters have access to authoritative interpretations 
of agency actions by responsible FTC officials and are less likely 
to misread the cryptic legal language of the complaint. More- 
over, such publicity practices are the most efficient means of 
funneling all inquiries to one place at one time. In press releases 
and at briefings, FTC officials scrupulously avoid comments likely 
to prejudice the respondent's case, and they are careful to point 
out that there has been no adjudication; the charges must still be 
proved before an administrative judge, reviewed by the Commis- 
sion, and perhaps reviewed by the courts as well.'^' Many re- 

^^5ee i6 C.F.R. § 2.31 (1973); FTC Publicity Guidebook 3-4. 

^^16 C.F.R. §§ 2.31-.34 (1973). However, there are many variations on this 
scenario. See, e.g., National Housewares, Inc., 73 F.T.C. 287 (1968) (consent order 
negotiated after issuance of adjudicative complaint). See also Seeburg Corp. v. 
FTC, 1966 Trade Cas. H 71,955 (E.D. Tenn.) (holding that FTC did not have to 
grant oral hearing or access to Commission memoranda during consent negotia- 

^"16 C.F.R. §§ 2.34(b), 3. II (1973); see FTC Publicity Guidebook 2. 

'' Whenever the Commission's news release may involve a charge of a law 
violation or could be so interpreted, the FTC includes the following notice, high- 
lighted by its inclusion in a black bordered box on the release: 

(NOTE: The FTC issues a complaint when it has "reason to believe" that 

the law has been violated. Such action does not imply adjudication of the 

matters alleged.) 
See, e.g., FTC Publicity Guidebook 26. This notice, or one similar to it, has 


spondents believe, however, that FTC press releases and briefings 
obscure the tentative nature of the charges filed, especially in the 
case of Part II complaints.'"' Often the media treat the filing of 
a complaint as if it were a final adjudication, and the public as- 
sumes that "where there's smoke there's fire." ^' 

These and other problems are illustrated by the Commission's 
erroneous adverse publicity regarding duPont's antifreeze Zerex. 
On November 25, 1970, the FTC issued a Part II complaint 
charging that an advertisement in which Zerex's ability to stop 
radiator leaks was demonstrated by punching holes in a can of the 
product was false and deceptive. ''^ According to the proposed 
complaint, the advertisement both misrepresented the product's 
leakstopping ability and failed to warn that the antifreeze might 
damage a car's cooling system. Encouraged by an FTC news 
conference, the press gave widespread coverage to the charges. 

been included in FTC publicity releases since its news practices were challenged 
in FTC V. Cinderella Career & Finishing Schools, Inc., 404 F.2d 1308 (D.C,. Cir. 

A random review of media reporting of FTC releases indicates that the notice 
is only occasionally included in the published report. On the other hand, most 
newspapers will contact the named respondent and include its denial in the story. 
Frequently, however, the paper also seeks out the response of FTC staff personnel. 
For illustration of the resulting "trial by press release," see Washington Post, Aug. 
18, 1972, at D8, col. 7 (FTC complaint against Korvette alleging deception in 
home remodeling). 

^® One major advertising executive, whose firm produced the Zerex commercial, 
recently excoriated the FTC's publicity policies: 

"You wake up one morning to find that you are clobbered on the TV 
broadcasts and in the headlines," Tom Dillon of Batten, Barton, Durstine 
& Osborn (BBDO) told a conference of advertising officials. Not only is 
there no warning, he said, but there is a "presumption of your guilt with all 
the weight of the U.S. Government . . . overnight your business and repu- 
tation are damaged, and quite possibly destroyed." 
Newsweek, June 4, 1973, at 84, 89. The charge is inaccurate, however, if it is 
meant to describe current FTC practices. 

Respondents also object to the FTC's refusal to permit them to reply in agency 
press releases or at agency news briefings to charges made against them. The ob- 
jection seems a weak one, however. The FTC always informs respondents before 
it files charges, and advises them in advance of its intentions concerning press 
releases and news briefings. FTC procedures certainly do not unfairly surprise the 
affected parties, and fairness would hardly seem to require the agency to provide 
respondents with a free public platform, especially since most are large corporations 
fully capable of reaching the public with their side of the story. In fact, respond- 
ents often issue their own releases, hold press conferences, and counter the Com- 
mission with advertising — a public information device unavailable to the FTC. 
In any event, the Commission itself will publicize the firm's formal answer when 
filed, unless a respondent wishes otherwise. 

^' Besides being unfair to the respondent, such premature publicity may, by 
solidifying the agency's stance on the matter, make it difficult for the Commission 
to negotiate a later settlement. 

^® E.I. duPont deNemours & Co., [1970-1973 Transfer Binder] Trade Reg. Rep. 
H 19,395 (F.T.C. 1970). 


National television news programs carried the story and broad- 
cast interviews with high-ranking FTC personnel. A year later 
the Commission, having concluded that Zerex was an effective 
leakstopper and that duPont had withdrawn the damaging for- 
mula from the market before the FTC issued its proposed com- 
plaint, withdrew the most serious charges against the company 
and alleged only that duPont had marketed a potentially harm- 
ful product for a time without clearly disclosing the hazard.^^ 
The FTC held no news conference to publicize its staff's error, and 
the press paid little attention to the modified charges.^" 

While the problems posed by FTC publicity are in many 
respects typical of administrative publicity in general, since most 
agencies regularly publicize every significant formal action/^ 
certain factors make the Commission's publicity practices for 
proposed complaints particularly questionable. The Zerex inci- 
dent is not unique. The Commission frequently dismisses or 
alters Part II complaints before issuing final orders.^- The 
charges publicized are tentative and often are not even finally 
entered as FTC complaints in the publicized form. Every com- 

^^ E.I. duPont deXemours & Co., [1970-1973 Transfer Binder] Trade Reg. Rep. 
jl 19,849 (F.T.C. 1971). The matter was mercifully ended in July 1972, when the 
FTC finally accepted a consent decree whereby duPont promised that it would 
not market any new automotive product unless it (i) pretests the product to 
determine if it can cause damage and (2) makes a clear disclosure if the answer 
to (i) is yes. E.I. duPont deXemours & Co., [1970-1973 Transfer Binder] Trade 
Reg. Rep. M 20,030, 20,075 (F.T.C. 1972). 

^° While duPont is unable to identify the injury caused by the Commission's 
erroneous charge — in part because the FTC complaint was filed at the end of the 
antifreeze selling season — it seems clear that the charges did injure the value of 
the Zerex trade name. Only occasionally is the "cost" of an FTC complaint readily 
identifiable. For example, when, on December 12, 1972, the Commission charged 
Xerox with unlawful monopolization, its stock dropped in value $8 that day. Wall 
Street Journal, Dec. 13, 1972, at 3, col. i; see Xerox Corp., [1970-1973 Transfer 
Binder] Trade Reg. Rep. H 20,164 (F.T.C. Dec. 12, 1972). 

■" The FTC and CAB are two examples. See Letter from Charles A. Tobin, 
Secretary of the Federal Trade Commission, to John F. Cushman, Executive Di- 
rector, .Administrative Conference, June 7, 1973; Letter from Whitney Gillilland, 
Vice Chairman of Civil Aeronautics Board, to John F. Cushman, Executive Di- 
rector, Administrative Conference, May 8, 1973. 

■•^ In fiscal 1972, the FTC issued 249 proposed (Part II) complaints; only 42 
adjudicative (Part III) complaints were docketed. Telephone Interview with 
Clara Hankins, Management .Analyst, FTC, Feb. 14, 1973. Former Commissioner 
Elman once determined that one-third of the appeals decided by the Commission 
in 1964 resulted in dismissals of the complaint. Elman, A Note on Administrative 
Adjudication, 74 Yale L.J. 652, 653 (1965). 

Although questionable, these publicity practices do not rise to the level of un- 
constitutional deprivations. Courts have approved such automatic publicity and 
summarily rejected due process claims. See, e.g., FTC v. Cinderella Career & 
Finishing Schools, Inc., 404 F.2d 1308, 1315 (D.C. Cir. 1968), discussed at note 30 



plaint is publicized, even when publicity serves no warning func- 
tion. The Commission officially publicizes alleged illegal prac- 
tices, sometimes long abandoned, before the respondent has a 
chance to be heard. Finally, in deciding whether to focus special 
public attention on a particular case by holding a news confer- 
ence or using other special publicity techniques, the Commission 
occasionally appears to be influenced as much by the desire to 
enhance its political position as by legitimate policy considera- 

The Commission's publicity practices are not without their 
defenders, however. Until recently, the FTC was known to con- 
sumer groups and other critics as the "toothless old lady of 
Pennsylvania Avenue." Its current activist image and enhanced 
effectiveness are due in large part to its public relations efforts 
and, as the FTC's Information Officer correctly points out, a 
crucial factor has been the Commission's ability to supply and 
package "hard news." ■*■* Furthermore, despite frequent unsub- 
stantiated complaints to the contrary by private attorneys, the 
FTC seldom uses adverse publicity as a threat or sanction. Media 
coverage of FTC actions probably depends on the intrinsic sig- 
nificance of its complaints and not on an intent to sanction by 
using publicity. Even the nationally televised "burning demon- 
stration," where former Chairman Miles Kirkpatrick put a match 
to a dangerously flammable kerchief, was designed to warn the 
public about particularly dangerous goods widely distributed and 
available; it did not emphasize the manufacturer's or distribu- 
tor's name.^'"' 

"•^ Similarly, one may object to publicity which endeavors to promote the career 
of an administrative official. See, e.g., House Comm. on Government Operations, 
Availability of Information from Federal Departments and Agencies, H.R. 
Rep. No. 2578, 8sth Cong., 2d Sess. 28-29, 219-27 (1958) (press release on "biog- 
raphy and human interest features" of Sinclair Weeks, Secretary of Commerce). 
Such publicity may, of course, benefit the agency, as former FBI director Hoover's 
personal integrity reflected on the FBI, saving the image of that formerly scandal- 
ridden agency. See H. Overstreet & B, Overstreet, The FBI in Our Open 
Society passim (1969). But cf. F. Cook, The FBI Nobody Knows 414 (1964). 

'"' Interview with David Buswell, Information Officer of FTC, in Washington, 
D.C., Aug. 28, 1972; accord, Advertising Age, June 18, 1973, at 12, col. 3. 

*^ The FTC's chronic inabihty to maintain file confidentiality poses another 
adverse publicity problem. For example, staff members upset with the Commis- 
sion's decision not to investigate Volkswagen's alleged practice of selling used 
vehicles as new cars in the United States leaked this information to the media 
and some of Ralph Nader's associates. See E. Cox, R. Fellmeth & J. Schulz, 
"The Nader Report" on the Federal Trade Commission 85-86 (1969). The 
disclosure did not alter the Commission's apparent decision to close the investigative 
file, but it did have an adverse effect on the VW image and possibly its sales. 

In this situation the issues are no different than those posed in determining 
whether agency records should be open to public scrutiny. See generally Wellford 


J. The Securities and Exchange Commission. — Securities and 
Exchange Commission (SEC) publicity policies have not escaped 
controversy, sometimes for using precisely the selectivity which 
critics accuse the FTC of lacking/" To protect the investing 
public, the federal securities laws rely chiefly on ''full public 
disclosure" by persons selling securities of all information relevant 
to the investment decision, whether favorable or unfavorable.*^ 
The Commission's function is to give the investing public the 
information it needs to decide for itself whether a particular in- 
vestment is desirable; it may be said with some truth that 
publicity is the essence of its statutory purpose. 

SEC procedures are simple and direct, especially when con- 
trasted with the FTC two-part complaint process. The SEC 
issues only final complaints, nearly all of which result in sub- 
sequent Commission orders. Thus, SEC practice protects re- 
spondents from adverse publicity resulting from tentative charges 
likely to be withdrawn, and staff leaks to the press or competitors 
of regulated parties are rare."*^ Until recently, however, there 
was a dispute over the question of whether registrants and other 
regulated parties should have an opportunity to be heard before 
the SEC institutes proceedings against them which might result 
in adverse publicity. Registrants wanted the SEC to notify them 
of contemplated proceedings and allow them to negotiate a settle- 
ment, or at least to make their views known, before it issued a 
complaint which is automatically publicized.*^ In fact, as knowl- 

V. Hardin, 444 F.2d 21 (4th Cir. 1971), noted in 85 Harv. L. Rev. 861 (1972); 
pp. 1421-23 infra. To compound the issue, the FTC has recently begun to issue 
press releases announcing which persons sought and were granted access to FTC 
files under the Freedom of Information Act. See, e.g., FTC News Release (Apr. 
23> 1973); FTC Procedures and Rules of Practice § 4.9(b) (15), 38 Fed. Reg. 1730, 
1 73 1 (1973) (information requests by nongovernmental agencies are public in- 
formation). The Commission has not announced what policy reasons justify this 
new publicity practice. 

"^ This Article suggests that such selectivity is proper, see p. 1427 infra, but the 
criteria for determining what should be publicized should be made available by the 
agency. See pp. 1395-98 infra. 

"'The principal acts are the Securities Act of 1933, 15 U.S.C. §§ 77a-77aa 
(1970); Securities Exchange Act of 1934, 15 U.S.C. §§ 78a-78hh (1970); and In- 
vestment Company and Investment Advisers Acts of 1940, 15 U.S.C. §§ 8oa-i to 
8ob-2i (1970). Under this authority, the SEC regulates the disclosure practices 
of thousands of corporate issuers and exercises broad, general authority over a 
diverse and complex industry whose central function is creating, marketing, and 
trading securities. 

"^ This stands in stark contrast to the ethos of the FTC, see note 45 supra, 
probably because of the SEC's awareness of the cataclysmic effect adverse publicity 
can have on the corporations it regulates. 

"® See, e.g., Freeman, Administrative Procedures, 22 Bus. Law. 891, 894-96 
(1967) ; Lowenfels, Securities and Exchange Commission Investigations: The Need 
for Reform, 45 St. John's L. Rev. 575, 580 (1971). 


edgeable members of the private bar were aware, the SEC per- 
mitted a potential respondent to submit his views in writing before 
a complaint was issued, and its staff would consider a settlement 
at that stage, although it could not formally negotiate until a 
complaint was filed. '^"^ While these procedures are defensible,"'^ 
it is inexcusable that the SEC did not publish them; they were 
published in the fall of 1972 after a series of interviews with SEC 
personnel for this study."'" 

Another significant dispute concerns publicity associated with 
SEC disciplinary proceedings against broker-dealers.''^ Congress 
has authorized the Commission to make such proceedings pub- 
lic or private, as it chooses,''^ and in practice the Commission 
holds many private hearings."'"' The chief objection to the Com- 

^" Interview with Stanley Sporkin, Assistant Director, SEC Office of Enforce- 
ment, in Washington, D.C., Aug. 15, 1972. 

^' See Memorandum from SEC Division of Trading and Markets to Wells 
Committee, Mar, 9, 1972. See also p. 1390 supra (discussing FTC practices). 

^^ SEC, Securities Act of 1933 Release No. 5310 (Sept. 27, 1972). See also 
Advisory Comm. on Enforcement Policies and Practices, Report of the Ad- 
visory CoMM. ON Enforcement Policies and Practices 31 (1972) [hereinafter 
cited as Wells Committee Report]. 

^^ The case for private hearings is stated in Freeman, supra note 49, at 891, 
897. See also Freeman, A Private Practitioner's View of the Development of the 
Securities and Exchange Commission, 28 Geo. Wash. L. Rev. 18, 24 (1959). The 
contrary position is argued persuasively by another practitioner. See Letter from 
Arthur F. Matthews to Wells committee. May 23, 1972, at 17-19. The Wells com- 
mittee recommended to the Commission that it 

adopt a procedure whereby it would issue a formal, but non-public, repri- 
mand in those cases where public investors have not been injured and the 
Commission is satisfied that the conduct which may have constituted a 
violation will not recur. 
Wells Committee Report iv, 30 (recommendation 15). Currently, the SEC 
publishes its decisions whenever it finds a violation, even if no sanction is imposed. 
See Ace Sec. Corp., SEC, Securities Exchange .^ct of 1934 Release No. 7442, at 4 
(Oct. 14, 1964); Merrill Lynch, Pierce, Fenner & Beane, 31 S.E.C. 494 (1950). 

"■* Securities Exchange Act of 1934, § 22, 15 U.S.C. § 78V (1970). Except for 
the 1933 Act, which provides that all hearings "shall" be public, 15 U.S.C. § 77U 
(1970), all SEC statutes provide that hearings "may" be public. See 15 U.S.C. 
§§ 77ttt, 79s, 8oa-40, 8ob-i2 (1970). 

^^ Such privacy may seem anomalous when compared with the general ad- 
ministrative practice of holding open hearings — particularly in the context of a 
statute aiming at "full disclosure" — but it is not unreasonable in light of the 
pubHc's sensitivity to SEC charges against broker-dealers. Merely by making such 
charges public, the SEC might seriously injure a respondent, and the sanction of 
premature publicity might well be more severe than any penalty the Commission 
would impose for the violation. Moreover, even if the charges are dismissed, the 
respondent may suffer irreparable harm, while the public secures no corresponding 

Because the Commission will hold a public hearing if all the respondents request 
one, see 17 C.F.R. § 201.11(b) (1972), there is no danger that it will engage in 


mission's methods of disciplining broker-dealers is that it has 
unpredictably changed its publicity policies with respect to such 
hearings and has regularly refused to make public the criteria 
governing its practices. The SEC originally held all disciplinary 
hearings in private; then, in 1957, it began holding most such 
hearings in public.'*' Today, many — about one-third — proceed- 
ings are again private. '^^ At no point has the Commission clearly 
stated the criteria upon which it decides whether to hold a public 
hearing; it has chosen instead to announce its policies in a few 
cryptic opinions. First among these was W.H. Bell & Co.,^^ a 
1947 case in which the SEC ordered a public hearing because 
"information bearing on matters similar to some of the allegations 
... is already a matter of public record . . . ." ''^ The Com- 
mission further explained its decision by invoking two vague 
tests: whether there was a public interest in the subject matter of 
the hearing and whether that interest outweighed the respondent's 
interest in privacy.*'" The SEC's next policy statement did not 
come until 1964, when in J.H. Goddard & Co.*" it found evi- 
dence of a substantial public interest in a disciplinary hearing 
because of the seriousness of the charges and the extent of the 
trading involved. 

In response to inquiries made during this study, the Commis- 
sion released the following general internal guidelines :^^ 

Where the statute allows, the Commission will ordinarily au- 

Star Chamber tactics. On the other hand, the publicity "option" may be worse 
than the SEC sanction, so the protection of "going public" is likely to prove illu- 
sory. In 1964, the AB.'\ recommended that all disciplinary proceedings be private 
unless the Commission determines, after allowing respondent a private hearing, 
that investor protection requires a public hearing. 89 A.B..^. Rep. 135 (1964). 
The SEC has wisely rejected this invitation for a two-tiered hearing procedure. 
Cf. p. 1390 supra (FTC procedures). 

^° See Letter from Howard G. Kristol, Special Counsel to the SEC, to Ernest 
Gellhorn, Oct. 30, 1972. 

*'' Interview with Stanley Sporkin, Assistant Director, SEC Office of Enforce- 
ment, in Washington, D.C., Mar. 8, 1973. 

■''* SEC, Securities Exchange Act Release No. 4039 (Dec. 17, 1947). 

•-'«W. at 2. 

®' 41 S.E.C. 964, 965-66 (1964). See also R..^. Holman & Co., SEC, Securities 
Exchange .•Vet Release No. 7770 (Dec. 15, 1965), aff'd, 366 F.2d 446 (2d Cir. 1966), 
amended on rehearing, 377 F.2d 665, cert, denied, 389 U.S. 991 (1967). 

''^ Memorandum from SEC to SEC Division Directors and Office Heads, Sept. 
I, 1970. In transmitting this memorandum to the author, the Special Counsel to 
the SEC Chairman emphasized 

that the Commission continues to make a separate determination in each 
case on the basis of the facts applicable to the particular case and that the 
factors mentioned in the earlier memoranda [see notes 63, 64 infra] con- 
tinue to be relevant considerations. 
Letter from Howard G. Kristol to Ernest Gellhorn, Oct. 30, 1972. 


thorize private proceedings in order to avoid unnecessary pub- 
licity and to afford respondents in administrative proceedings 
time to discuss settlement with the staff after the proceedings 
are authorized, except in those cases that involve a need to alert 
public investors to continuing practices or acts which would 
operate as a fraud on such investors. 

Additional staff memoranda approved by the Commission spell 
out the factors applied,*'^ and the latest, which is generally un- 
available, is reprinted in the margin. '^^ As it is thus articulated, 

^^ Memorandum from Philip A. Loomis, Jr., Director, SEC Division of Trading 
and Exchanges, to SEC Regional Offices, June lo, 1957 (forwarding SEC approved 
Memorandum from Philip A. Loomis, Jr., to SEC, Feb. 28, 1957) ; Memorandum 
from Thomas W. Rae, Assistant Director, SEC Division of Trading and Markets, 
to SEC Staff Attorneys, Office of Enforcement, Dec. 22, 1964. Special Counsel 
Howard Kristol advises that these are the only internal memoranda dealing with 
the subject that have been circulated within the Commission and approved. 

"^ The criteria currently applied by the Commission are set forth in Memoran- 
dum from Stanley Sporkin, Assistant Director, SEC Office of Enforcement, Divi- 
sion of Trading and Markets, to SEC Regional Offices, Aug. 23, 1967, as follows: 

1. All [regional officel memoranda [recommending a public or private hear- 
ing] should briefly describe the current status and nature of registrant's 
business. This description should cover the type of securities traded and 
sold (listed, over-the-counter, seasoned, speculative, etc.) ; the nature and 
scope of registrant's principal activities (trader, retailer, underwriting 
activities, etc.); number of employees; selling practices (telephone, ad- 
vertising, personal contacts, etc.) ; reputation and background of regis- 
trants, including past violations and extent and nature of any public 
complaints; and any other relevant information which will provide the 
Commission with a general picture of the overall character of the regis- 
trant and its activities. 

2. In making the determination as between public and private proceedings, 
you should consider both the factors enumerated in subparagraph i above 
as well as the overall nature and scope of the alleged violations. In 
particular, careful consideration should be given to the following factors: 

(a) whether the alleged violations involve any new theory or interpreta- 
tion of the Federal securities acts or any rule or regulation there- 

(b) the necessity of publicly disclosing to investors the existence and 
availability of civil remedies ; 

(c) the necessity of alerting prospective and existing customers to the 
alleged activities of registrant. This determination must take into 
account whether the charged violators are still in the employ of 
registrant; whether registrant has taken corrective measures to in- 
sure future compliance; whether the NASD or the exchanges have 
taken any disciplinary action against registrant or its salesmen and 
if so, whether that action was publicly disclosed; whether registrant 
has undertaken restitution or extended other relief to aggrieved cus- 
tomers; whether charged violators who are still in the employ of 
registrant are in a position to perpetrate further violations; and the 
character, nature and scope of the alleged violations; 

(d) the importance of alerting the industry to the fact that the Com- 
mission has taken action with respect to the particular practices 
involved in the proceeding; and 

(e) the necessity of public disclosure where there is substantial indication 
that the respondents carried out other unlawful transactions with 
persons whose identities are unknown to the staff and where public 
proceedings might serve to uncover their identities (i.e., where books 
and records are incomplete and other similar situations). 

It should be clearly understood that this memorandum does not attempt 


the SEC's policy reaches a sensible balance of public and private 
interests, and the Commission's earlier failure to disclose it is 

C. Agency Use of Publicity as a Sanction to 
Bolster Statutory Enforcement Powers 

I. The Equal Employment Opportunity Commission. — His- 
torically, civil rights commissions and agencies encouraging fair 
employment practices have had to rely almost solely on the threat 
of coercive publicity to accomplish their goals. The delay of 
going to court and the difficulty of showing discriminatory intent 
have limited the value of litigation. Even when a suit is success- 
ful, civil penalties are relatively light and criminal penalties are 
rare.**^ More importantly, the fundamental goal of such agencies 
has been to improve group relations and reconcile differences. 
The operating assumption has been that discrimination can be 
eradicated only by eliminating its causes: ignorance and historical 
barriers to contact. Open informational avenues directly achieve 
these ends.^'' 

Professor Rourke has succinctly summarized the importance 
of adverse publicity in the operation of state fair employment 
practice agencies :^^ 

[0]ne of the most important factors working in behalf of FEP 
agencies has been an unwillingness on the part of those against 
whom discrimination has been alleged to have the charges 
against them publicized at a formal hearing. In the states in 
which it has been possible to enact FEP laws, the publicity con- 
nected with such a hearing is in itself punishment, whatever the 
verdict of a hearing tribunal may be. From the point of view of 
a business firm it becomes a vital necessity to avoid a hearing, 
since public relations considerations must be given precedence 
over whatever estimate the firm may make of its legal position 
in a case. As one study of fair employment administration con- 
cluded: "embarrassment not harassment or punishment is the 
chief sanction." 

to promulgate any standard rule for determining whether a proceeding 
should be public or private. Such determinations must be made on a case 
by case basis taking into consideration the particular circumstances existing 
in each situation. However, the memorandum is designed to alert your staff 
to the factual matters you should consider in making your recommendation. 
Special Counsel Howard Kristol notes that while this 1967 Memorandum was 

not specifically approved by the Commission, it is a recirculation of the 1964 

Memorandum which was approved. See note 63 supra. 

'^^ See F. Rourke, Secrecy axd Publicity: Dilemmas of Democracy 129 


^® Of course, an agency possessing substantial enforcement powers may be better 
equipped to deal with these causes. 

°'' F. Rourke, supra note 65, at 134. 


The Equal Employment Opportunity Commission (EEOC) 
is the descendant both of state fair employment practice agencies 
and of executive agencies set up under presidential orders designed 
to combat discrimination through use of the government's pur- 
chasing power.*'" Since its formation in 1964, the Commission 
has continually sought increased enforcement powers, which Con- 
gress has only recently — and sparingly — granted."^ As a de- 
liberate restriction of EEOC's power to use adverse publicity as 
a sanction, Congress has forbidden the Commission to publish its 
complaints until conciliation efforts fail and formal charges have 
been filed.'" 

EEOC's publicity practices reflect the agency's frustration 
with its broad mandate and limited enforcement powers. In 
theory, the Commission uses publicity merely to notify employers 
of their duties under Title VII of the Civil Rights Act of 1964 
and to inform protected persons of their rights. ^^ In practice, 
EEOC publicity often condemns alleged violators in pejorative 
terms, and Commission personnel assert in unguarded moments 
that intemperate language is needed to gain the confidence of 
constituent groups. 

Over the past five years, in a half-dozen cities, the EEOC has 
held informal public hearings, preceded by staff studies, to in- 
vestigate employment practices in particular industries or geo- 
graphic regions.'- Having determined, for example, that employ- 

^^ See Developments in the Law — Employment Discrimination and Title VII 
of the Civil Rights Act of 1964, 84 Harv. L. Rev. 1109, 1275-304 (1971). 

*'" 5ee Blumrosen, Strangers in Paradise: Griggs v. Duke Power Co. and the 
Concept of Employment Discrimination, 71 Mich. L. Rev. 59, 94-100 (1972). 
Originally empowered to investigate and mediate employment discrimination com- 
plaints, the EEOC today has power to prosecute but not to adjudicate civil actions 
against many employers. Equal Employment Opportunity Act of 1972, 42 U.S.C.A. 
§§ 20ooe-5, -6(e) (Supp. 1972), amending Civil Rights Act of 1964, tit. VII, 42 
U.S.C. §§ 2oooe-20ooe-i5 (1970); see Conference Committee, Joint Explana- 
tory Statement on H.R. 1746 to Further Promote Equal Employment Op- 
portunities FOR American Workers, S. Rep. No. 681, 92d Cong., 2d Sess. (1972) 
(section-by-section analysis) . Only the Justice Department may prosecute actions 
against state and local go\ernments. 


Charges shall not be made public by the Commission. . . . Nothing said or 
done during and as part of such informal endeavors may be made public by 
the Commission, its officers or employees, or used as evidence in a subsequent 
proceeding without the written consent of the persons concerned. Any per- 
son who shall make public information in violation of this subsection shall 
be fined .... 

Equal Employment Opportunity Act of 1972, 42 U.S.C.A. § 20ooe-s(b) (Supp. 


'" 5ee generally Developments in the Law, supra note 68. 

''^ These hearings, which produce neither rules nor adjudicative decisions, are 


ment discrimination practices in Houston were "among the worst 
in the Nation," the Commission invited thirty-one large employers 
and six local building-craft and longshoremen's unions, as well 
as community groups and individuals, to take part in public 
hearings there in June 1970."^ According to the EEOC, "The 
purpose of the presence of these people was 'to tell it as they see 
it' .... It was not to receive specific charges of discrimination 
by these individuals against local employers or unions." '* But 
the hearings did not live up to this promise. Press releases and 
televised news conferences pointedly noted the names of nineteen 
companies which declined to appear, ^'^ and individual Commis- 
sioners and sometimes the Commission as a whole charged specific 
individuals and firms with violations of Title VII, even though 
formal charges were not immediately filed and the supporting 
evidence was unclear.'" 

Such Commission practices seemingly contravene the implicit 
statutory limits placed on EEOC publicity and arguably exceed 
the limits on public investigations established by the Supreme 
Court in Hannah v. Larchc ''^ and Jenkins v. McKeithen.'^ Those 
cases suggest that when government officials charged with en- 
forcement of a particular statute publicly accuse a witness of 
violating it, due process may require that the witness be given 
the right of confrontation and a chance to be heard.'"' 

EEOC's trial publicity practices are no less questionable. 
Recently, the agency requested the Federal Communications 
Commission (FCC) to investigate allegations that AT&T's op- 
erating companies were engaged in "massive, deliberate, illegal 
discrimination [in employment] against blacks, women, Spanish- 
surnamed Americans and other minorities." *^'' Disregarding the 

both public and publicized, and the Commission sometimes brands individuals and 
companies as law violators without affording them the usual procedural protections. 

''^ See EEOC, They Have the Power — We Have the People 1-3 (1970) 
[hereinafter cited as Houston Report]. 

''"Id. at 3. 

''^ See id. at 2-3; Houston Post, June 3, 1970 § i, at 14, col. i. See generally 
EEOC, Press Coverage of Hearings on Discrimination in Employment, Hous- 
ton, Texas (1970). 

""^ See Houston Report 13-27; Hearings Before EEOC, Utilization of Minority 
and Women Workers in Certain Major Industries 250-72 (1970). 

"363 U.S. 420 (i960) (voting registrars not entitled to cross-examine, during 
nonpublic informational hearing, witnesses accusing them of discriminatory prac- 

^* 395 U.S. 411 (1969) (state commission conducting public hearings and making 
findings of criminal law violations abridged due process rights when it deprived 
accused witness of confrontation and cross-examination). 

''^ But cf. Developments in the Law, supra note 68, at 1237 n.244. 

""In re American Tel. & Tel. Co., 27 F.C.C.2d 151, 158 (1971). The FCC 
denied EEOC's original petition seeking to intervene as a party in AT&T's rate 
increase hearing, id. at 159, but it did order a hearing to explore whether AT&T's 


fact that the agency was a party to the resulting FCC hearing, 
the EEOC issued a newsletter stating that the agency's trial coun- 
sel regarded AT&T's practices as "the most staggering and unbe- 
lievably overt [sex] discrimination I've ever encountered." ^^ 
According to the EEOC publication, the trial counsel also said that 
the Bell System is "in the dark ages with regard to sex discrimina- 
tion. It isn't a matter of a neutral practice having a disparate 
effect — it's plain disparate treatment." ^^ EEOC's vivid trial 
memorandum in the case was published in the Congressional 
Record,^^ and over 4,000 copies were distributed by the Commis- 

Although EEOC admits that it has never examined its public- 
ity policies nor announced publicity guides or regulations, it 
argues that its present practices are necessary to maintain public 
confidence, to inform constituent groups, to obtain needed evi- 
dence, and to encourage private suits. Admittedly, EEOC charges 
do not carry criminal penalties, and its counsel may therefore 
have lesser obligations than those imposed on crihiinal prosecu- 
tors.*^'* Nevertheless, EEOC's "trial-by-press" tactics seem ob- 
jectionable and unnecessary.^^ 

2. The Environmental Protection Agency. — Typical of many 
recently-created regulatory agencies, the Environmental Protec- 
tion Agency (EPA) is a conglomerate of several preexisting 
bodies with interindustry jurisdiction. Its functions have at vari- 
ous times been performed by such governmental bodies as the 
Atomic Energy Commission, the Council on Environmental Qual- 
ity, and the departments of the Interior, HEW, and Agriculture.^" 
Even now, the EPA must share many of its powers with state or 
regional authorities, acting only when they fail to do so. The EPA 
cannot bring criminal actions directly, but must refer its find- 
ings to the Department of Justice for prosecution.^' 

employment practices violated FCC antidiscrimination policies. See In re Petitions 
Filed by the EEOC, 27 F.C.C.2d 309 (1971). The issue has been settled by agree- 
ment. See Newsweek, Jan. 29, 1973, at 53; note 83 infra. 

*' EEOC Newsletter, .'\ug. 1971, pt. 2, at 3. 

«' Id. at 4. 

^^ See 118 Cong. Rec. E1243-72 (daily ed. Feb. 17, 1972). AT&T responded 
to the EEOC charges in kind, accusing it of "hyperbole of monstrous proportions." 
.\T&T, News Release i (Aug. i, 1972), quoting Memorandum of AT&T at 16, No. 
19143 (F.C.C. 1972); see Wall Street Journal, Aug. 2, 1972, at 13, col. 3. The 
case has now been settled by agreement. AT&T will pay approximately $15 million 
in back wages and confer about $23 million in raises to about 50,000 of its em- 

^*See 28 C.F.R. § 50.2 (1972). 

*^ For an eloquent statement of the obligation of government lawyers in ad- 
ministrative proceedings, see L.G. Balfour, 69 F.T.C. 1118, 1128 (1966) (Com- 
missioner Elman, dissenting). 

^^ Reorganization Plan No. 3 of 1970, § 2, 84 Stat. 2086. 

^'' See, e.g., Federal Water Pollution Control Act Amendments of 1972, Pub. L. 
No. 92-500, tit. Ill, § 309, 86 Stat. 816, amending 33 U.S.C. §§ 1151-75 (1970). 


Because it lacks significant formal enforcement powers, the 
EPA has relied primarily on persuasion in dealing with other 
governmental units and private parties. The agency obviously 
uses publicity to enhance its political stature, to inform the public 
about its actions, to pressure other governmental units into action, 
and to punish and deter law violators. Press releases relating 
to enforcement actions perform some or all of these functions 

In contravention of the Justice Department's policy of re- 
leasing only essential information during pretrial stages, '^'^ the 
EPA routinely issues press releases and frequently holds news 
briefings whenever it refers a matter to the Department for pos- 
sible prosecution. An outstanding example of this interagency 
conflict occurred in September 197 1, when the EPA sought to 
revitalize the Refuse Act. 

Section thirteen of the Rivers and Harbors Act of 1899,^*^ 
popularly known as the Refuse Act, makes it illegal to deposit 
refuse into navigable waters without first obtaining a permit 
from the Secretary of the Army, who acts on the recommendations 
of the Army Corps of Engineers."" However, the Refuse Act long 
went unenforced; the Corps of Engineers did not even adopt per- 
mit procedures until the EPA announced its intention to seek legal 
action against polluters who did not obtain permits by July i, 
1971.''^ When the deadline passed, the EPA directed each of its 
ten regional offices to select ten firms not meeting the deadline. 
Next, it reduced this list of one hundred to a group of thirty-five 
representing "a cross section of industrial polluters throughout 
the United States." EPA Administrator WilHam Ruckelshaus 
then announced that he had asked the Justice Department "to 
take legal action under the Refuse Act." EPA's general counsel 
held an hour-long press conference during which he suggested 
"that in many of the cases or in perhaps all of them, criminal 
suits will be filed . . . ." ''- Not surprisingly, the press empha- 
sized the likelihood of criminal action in reporting the story. In 
fact, however, the EPA had little evidence to support most of its 
charges, and the Justice Department did not institute any pro- 
ceedings in thirty of the cases and brought criminal actions in 
only three of the remainder."'' Justice Department officials were 

^^See 28 C.F.R. § 50.2 (1972). 

««33 U.S.C. § 407 (1970). 

"^ The Corps of Engineers now operates in consultation with the EPA. See 
Exec. Order No. ii,S74> 3 C.F.R. 309 (1973), 33 U.S.C. § 407 (1970). 

^' See id. 

®^ EPA Assistant Administrator for Enforcement and General Counsel John R. 
Quarles, Jr., Press Conference Concerning Permit Program, Sept. 23, 1971, at 2. 

®^ See Interview with Martin Green, Chief, and Alfred Ghiorzi, Ass't Chief, 


undisguisedly disturbed by the EPA's publicity practices. 

Although a notorious example, the "thirty-five polluter" epi- 
sode was hardly an isolated one. In April 1972, the EPA's re- 
gional office in Philadelphia announced that it was recommending 
action against four firms that were polluting Baltimore Har- 
bor.^* Although he later brought successful criminal prosecutions 
against the firms, the United States Attorney for Maryland was 
"furious" at the EPA's flagrant violation of district court rules 
against pretrial statements by parties involved in criminal cases.^^ 

Changes in statutory enforcement powers against polluters 
may reduce the EPA's felt need to deter through adverse public- 
ity. The 1972 Amendments to the Water Pollution Control Act ''*' 
have supplanted the Refuse Act, under which many EPA com- 
plaints arose, and the new penalties relate more closely to the 
seriousness of violations. Of course, if public interest in environ- 
mental causes wanes, the pressure for rigorous enforcement and 
the concomitant use of adverse publicity will also subside. But 
even if ecology remains an important issue, there is nothing 
unique about Refuse Act prosecutions or environmental lawsuits 
involving criminal actions which should distinguish the proce- 
dures for their publicity from other criminal actions for business 
crimes, and the problem of trial and punishment by publicity 
therefore will remain.^^ 

J. The Cost of Living Council. — Created during periods of 
crisis amid calls for patriotic cooperation, and invariably viewed 
as temporary establishments which will disappear when the emer- 
gency passes, agencies administering wage and price controls tend 
to rely on the publicity sanction without regard for the standards 

Pollution Control Section, Land and National Resources Division, Dep't of Justice, 
in Washington, D.C., Aug. 14, 1972 ; Letter from Robert McManus, Staff Attorney 
to EPA, to John F. Cushman, Executive Director, Administrative Conference, 
May 3, 1973. 

^^ For an account of the conflict between the Department of Justice and the 
EPA, including the Baltimore Harbor episode, see Washington Post, Nov. 24, 1972, 
at I, col. I. Environmentalists have also criticized EPA publicity, but not because 
of its unfairness. Their concern, rather, has been with the reluctance of EPA and 
the Department of Justice to rely on formal criminal and civil sanctions, since they 
often view polluters as insensitive to the "public interest" and unaffected by ad- 
verse publicity. See generally D. Zwick & M. Penstock, Water Wasteland (1971) 
(Nader study group report on water pollution). 

®^ See Washington Post, supra note 94. Such disputes have encouraged Justice 
Department and EPA officials to seek a procedural compromise. According to 
some Justice officials, the EPA has now agreed not to issue premature press re- 
leases, although EPA administrators assert that they have merely promised to 
avoid reference in such releases to possible criminal actions. 

^*^ Federal Water Pollution Control Act Amendments of 1972, Pub. L. No. 92- 
500, 86 Stat. 816, amending 33 U.S.C. §§ 1151-75 (1970). 

^^ Cf. pp. 1400-01 supra (EEOC publicity). 


of fairness observed in other situations.'"* The recently estabUshed 
Cost of Living Council (CLC) and its wage and price boards 
have been no exceptions. 

Although the most thorough and scrupulously fair adminis- 
tration of economic controls was probably that of the Office of 
Price Administration (OPA) during the Second World War, it 
was not beyond criticism. Perhaps the most serious criticism 
leveled against OPA was that it sometimes filed charges merely 
to call public attention to its program and to coerce compliance 
rather than to try the allegations in court."^ In response, one 
newspaper even refused to report OPA charges until proceedings 
reached the trial stage. ^'*" The same practice permeates the cur- 
rent control program. Not only has the CLC used publicity 
rather than formal sanctions to coerce parties within its acknowl- 
edged sphere of competence, but it has also used publicity to 
extend its control to parties not covered by its enabling statute 
and regulations. For example, the President's Phase I announce- 
ment and subsequent executive order did not freeze stock divi- 
dends, although it did "request" that corporations not increase 
dividends above the rate of the prior quarter.^"' When six large 
firms seemingly disregarded the President's request and an- 
nounced increased dividends, the CLC reacted with immediate 
publicity.'"- It sent telegrams to the chief executives of the com- 
panies asking them to meet with CLC leaders Connally, Rumsfeld, 
and McCracken four days later in Washington. The meeting was 
to be closed, but the telegrams were widely publicized, and Acting 
Council Chairman McCracken read their text at a televised news 
conference. As the Council's press officer recounts, CLC called 
the chief executives of the six firms the day after the telegrams 
were sent and asked if they had been received; if not, they were 
read over the phone. The executives were also told that the tele- 
grams would be released with great fanfare that afternoon, and, 

"** For a vivid account of the use of publicity as a sanction in enforcing eco- 
nomic controls during the Depression, see A. Schlesinger, Jr., The .^ge of 
Roosevelt: II. The Coming of the New Deal i 14-16, 119-20 (1959). But cj. 
J. Chamberlain, N. Dowling, & P. Hays, The Judicial Function in Federal 
Administrative Agencies 121 (1942) (ineffectiveness of NRA Blue Eagle as a 
means of encouraging compliance through favorable publicity). 

^^ See F. RouRKE, supra note 65, at 126. 

'°°See M. Clinard, The Black Market 86-87 (1952)- 

"" 5ee Exec. Order No. 11,615, 3 C.F.R. 199 (expired 1972); Speech by Presi- 
dent Richard M. Nixon, Aug. 15, 1971, in 2 Econ. Controls Rep. H 8365, at 
8389. Although Congress had authorized the President to control dividends, see 
Economic Stabilization Act Amendments of 1971, tit. II, § 203(a)(2), 85 Stat. 
743, he chose not to do so. The Council's authority therefore did not extend to 
dividend control. 

'°^Cost of Living Council, News Release i (Sept. 4, 1971). 


incredibly, that there would be no practical chance of rebuttal. ^"^ 
CLC's pressure tactics succeeded, and the Washington meet- 
ing was almost an afterthought. When it ended, five of the firms 
issued a joint statement, with Treasury Secretary Connally's 
benediction, announcing that they had agreed to cooperate with 
the President and rescind dividend increases. Secretary Connally 
branded the action of the holdout Florida Telephone Corporation 
a "disheartening . . . demonstration of recalcitrance." ^°^ Four 
days later he announced that the company had agreed to comply. 
The coercion directed against the six firms was part of a larger 
plan to hold down corporate dividends, and the press release 
which revealed the contents of the six-firm telegram also an- 
nounced that another telegram had been sent to 1,250 of the 
nation's largest corporations reminding them of the President's 
determination to hold down dividends and asking for a return 
telegram confirming their willingness to cooperate with the divi- 
dend freeze. When coupled with the publicity "administered" to 
the six "offenders," this warning had the desired effect: there 
were no further dividend increases during the period. In terms 
of its own budget, CLC had achieved compliance at an extremely 
low enforcement cost. On the other hand, the effort to control 
dividends was entirely ultra vires in terms of the President's 
original "freeze" order.'"'' 

In a crisis situation such as that in which the Council has 
operated since its inception, such publicity practices may be 
necessary to secure compliance and maintain public confidence. 
It would seem, however, that the Council has not sufficiently ex- 
plored alternative means of obtaining summary results that are 

'°^ Interview with William J. Greene, Assistant Director of CLC for Congres- 
sional and Public Affairs, in Washington, D.C., Aug. 11, 1972. 

^°* Cost of Living Council, News Release 2 (Sept. 9, 1971). In fact, the Council 
had misread the earlier dividend announcements, since its release conceded that 
two of the six firms had not declared a dividend increase. Secretary Connally's 
confession of error did not receive the same publicity as the original telegrams, 

^°^ On occasion, the Council has also used seemingly adverse publicity not as a 
sanction but as an instrument of political compromise. An example concerned the 
dispute in August 1971 over the freeze of Texas schoolteachers' salaries. It seems 
clear that Texas Governor Smith, despite his noisy defiance of the CLC, intended 
to resist the freeze only long enough to curry favor with a portion of the Texas 
electorate. The Council's "adverse" publicity, which strengthened the Governor's 
position at home, was apparently given in exchange for his ultimate agreement. 
On another occasion, the Council used adverse publicity to save face before itself 
backing down. Under its regulations, the Council was powerless to deny price 
increase requests made by automobile manufacturers in the summer of 1972, yet 
it was politically inexpedient to permit an uncontested increase in an election year. 
The Council thus issued adverse press releases to demonstrate its zeal before aban- 
doning the fight. See N.Y. Times, Aug. 15, 1972, at i, col. 6. 


Still fair.'*'*' The maxim often ascribed to the Council — "when 
in doubt, put it out" — is admirable when applied to general 
policy questions, but may be unfair and unnecessary when pub- 
licity is directed against individual firms/*^^ 

^°^ See generally Freedman, Summary Action by Administrative Agencies, 40 
U. Chi. L. Rev. i (1972). 

'°^ The SEC was once another notorious dispenser of adverse publicity as a sanc- 
tion. To ensure that purchasers of securities receive adequate and accurate infor- 
mation, the Securities Act of 1933, 15 U.S.C. §§ 77a-77aa (1970), relies chiefly 
upon the registration statement which an issuer must file with the SEC and which 
contains, among other things, the prospectus which will be used to sell the se- 
curities. I L. Loss, Securities Regulation 179-84 (2d ed. 1961). .As originally 
conceived, the statutory framework gave the SEC an enforcement arsenal in which 
the chief weapon was the stop order — a formal means of prohibiting, by pre- 
venting the registration statement from becoming effective, the sale of regulated 
securities for which a deficient statement had been filed. Early in its history, the 
SEC asserted its right to publicize a stop order by issuing public findings and a 
complete opinion even though a registrant had stipulated its deficiencies and con- 
sented to the order. See, e.g., Oil Ridge Oil & Ref. Co., i S.E.C. 225 (1935). See 
also Continental Distillers & Importers Corp., i S.E.C. 54, 57 (1935). In one case, 
for example, the Commission believed a published decision, with its attendant 
adverse publicity, was necessary when the registrant had engaged in clearly fraudu- 
lent activities: 

Despite the registrant's consent to the issuance of a stop order, the nature of 
this case, in essence, an enterprise to deal in an irresponsible fashion with the 
small savings of city and county school teachers, makes it not only desirable 
but imperative to file these findings and this opinion, so that the untruthful- 
ness and the unfairness of the registrant's officers should be a matter of 
public record. 
National Educators Mut. .Ass'n, i S.E.C. 208, 210 (1935). Clearly, such publicity 
was intended to punish the registrant and to deter others from similar conduct, 
although these do not seem to be the purposes for which Congress designed the 
stop order. 

Formerly, the SEC also made frequent use of the threat of adverse publicity 
that is connected with a formal complaint in order to regulate security issues. Since 
a similar power is now used to oversee broker-dealer actions, it is worth noting. 
Professor Rourke described the Commission's use of publicity: 

Only rarely has the SEC found it necessary to hold a public hearing in con- 
nection with its regulation of the marketing of securities. Fear of the adverse 
publicity connected with the public airing of a complaint has been a suffi- 
cient pressure to bring about compliance with SEC suggestions for altera- 
tions in the language of a prospectus. This is so, of course, largely because 
successful flotation of an issue of stock demands absolute confidence in the 
integrity of the product offered for purchase by investors. .Any publicity 
as to the existence of doubt regarding the truth of claims made in a pros- 
pectus would almost certainly have a fatal effect upon the sale of the se- 
curities concerned. 
F. Rourke, supra note 65, at 131. 

Under current procedures, the power to grant or deny acceleration of the filing 
date performs the same function. Because the mere threat that acceleration will 
be denied is usually enough to ensure compliance, registrants are seldom in a posi- 
tion to seek judicial review of the Commission's action. The procedural safeguards, 
if any, on the use of such threats must be imposed upon the staff by the Commission 
itself. See J. Laxdis, The .Administrative Process 109-10 (1938); Friendly, 
Address to A.B.A. Section of Corporation, Banking, and Business Law, 22 Bus. 


D. Mixed Cases: Agency Use of Publicity Both 
to Inform and Warn, and as a Sanction 

The preceding sections separate for heuristic purposes in- 
stances of agency pubHcity which fall either into the category of 
information and warning, or into the category of sanction. In 
fact, however, many agency uses of publicity simultaneously 
warn and sanction. The issuance of publicity by the Food and 
Drug Administration in connection with its voluntary recall pro- 
gram and by the National Highway Traffic Safety Administration 
in connection with its statutory defect notification program ex- 
emplify the common situation in which publicity serves to warn 
at the same time that it ensures compliance. 

/. The Food and Drug Administration and Dangerous Foods. 
— Publicity by the Food and Drug Administration (FDA) serves 
its most important and accepted function in warning the public 
of imminent perils to health and safety. Originally established 
to protect the public against poisonous preservatives and dyes in 
foods and against cure-all claims for worthless and dangerous 
patent medicines, the FDA today has general authority to protect 
the consumer from dangerous, mislabeled, and ineffective foods, 
drugs, medical devices, and cosmetics.'"^ Its ability to protect 
the consumer depends on identification and speedy removal from 
the market of products known to be, or reasonably suspected of 
being, defective. The statute explicitly gives the FDA two basic 
tools for removal of defective products: seizures ^"■' and injunc- 
tions.'^" Both depend on court approval and are costly to admin- 
ister, time-consuming, and, if the food processor is uncooperative, 
often ineffective.'" In order to encourage industry cooperation, 
and because the FDA has no authority to detain products tempo- 
rarily while it investigates them, it has developed a technique 
known as the "voluntary recall":"- on discovery of a health 
hazard, private firms — at the FDA's request or on their own 

Law. goo, 902 (1967); pp. 1423-.P infra. Most observers accept this situation, 
however, because they believe it is necessary to the performance of the SEC's 
statutory function, and because the denial of acceleration or the threat of it is 
regularly preceded by careful investigation. See .'\ttorney General's Comm. on 
.Administrative Procedure, supra note 30, at 54. 

'°® Food, Drug, and Cosmetic Act of 1938, 21 U.S.C. §§ 301-92 (1970). 

'°'W. §334. 

'■°w. § 332. 

' ' ' See Comptroller Ge.meral of the United States, Lack of Authority 
Limits Consumer Protection: Problems in Identifying and Removing from 
the Market Products Which Violate the Law, 8-164031(2), at 18-25 (1972). 

^^^ See 21 C.F.R. § 3.85 (1972); House Comm. on Government Operations, 
Recall Procedures of the Food and Drug Administration, H.R. Rep. No. 
92-585, 92d Cong., ist Sess. 3 (1971) [hereinafter cited as House Recall Report]. 


initiative — take steps to remove the unsafe products from the 
market. Since such removal cannot be required by law, the FDA 
ensures compliance by threatening seizure, injunction, and the 
issuance of publicity. Of these, the threat of publicity is usually 
the most potent persuader. 

The FDA is one of the few agencies granted specific statutory 
authority to issue adverse publicity.^''* Without recourse to this 
power it is doubtful whether the agency could perform the func- 
tions expected of it today. Nevertheless, the FDA's use of ad- 
verse publicity in the recall program has been highly contro- 

The controversy can be traced to the 1959 cranberry episode, 
a public announcement which was in effect an involuntary recall. 
In the cranberry episode, the FDA issued a national public warn- 
ing for the first time,"* with consequences so devastating to the 
industry that henceforth the mere threat of a public announce- 
ment functioned to help enforce a voluntary recall procedure. 
On November 9, 1959, a day still known as "Black Monday" in 
the industry. Secretary of Health, Education, and Welfare Arthur 
Flemming held a news conference at which he urged the public 
not to buy cranberries grown in Washington and Oregon, saying 
they might be contaminated with a chemical weed killer, amino- 
triazole, that had been found to cause cancer in laboratory rats.'''' 
Although the Secretary admitted he had no information suggest- 
ing that cranberries from other states were dangerous, he would 
not say they were safe. Answering a reporter's question, the 
Secretary stated he would not be eating cranberries that Thanks- 
giving. Not surprisingly, most of the nation followed suit. Since 
cranberries are purchased primarily for the holiday season, vir- 
tually the entire crop remained unsold, even though 99 percent 
of it was subsequently "cleared" and marketed as government 
"approved." ''** 

"^21 U.S.C. § 375 (1970); see p. 1411 & note 125 infra. 

"" In 1957, the FDA had issued warnings in connection with the Hoxsey cancer 
cure. But those warnings were in rebuttal to the defendant's extravagant claims 
for a worthless and dangerous device and appeared to fall within the intent of § 
705(b) of the Food, Drug, and Cosmetic Act of 1938, 21 U.S.C. § 375(b) (1970). 
See Hoxsey Cancer Clinic v. Folsom, 155 F. Supp. 376 (D.D.C. 1957) ; J. Young, 
The Medical Messiahs: A Social History of Health Quackery in Twentieth- 
Century -America 286-88 (1967). 

"^This description is based on numerous interviews, a review of the FDA files, 
subsequent congressional committee hearings, and contemporaneous newspaper re- 
ports. See also Hearings on Dep't of Agriculture Appropriations Before the House 
Subcomm. of the Comm. on Appropriations, 86th Cong., 2d Sess., pt. 5, at 7, 34, 
45-46 (i960). 

""An undated internal FDA document made available to the author sum- 
marized the impact as follows: 

The FD.A tested and cleared a total of 33.6 million pounds of cranberries 


In retrospect, the Secretary's action seems, at best, question- 
able. Given a sufficient dosage of aminotriazole, laboratory rats 
had indeed contracted cancer of the thyroid. But as the scientist 
who carried out the experiments noted, it would have taken years 
for a consumer to ingest enough contaminated cranberries to re- 
produce the laboratory results."' Moreover, even if the situation 
required a wholesale removal of the product, the issuance of a 
public warning, particularly one accompanied by such inflamma- 
tory statements, may not have been justified. The industry was 
cooperating and, to the extent that its self-policing program was 
deficient, seizures or injunctions would have been preferable 
remedies. Nor did the Secretary's action take account of the 
cost to the industry of the unsold crop. 

With the aid of enormous political pressure, the cranberry 
growers quickly convinced Congress that they were entitled to 
assistance and compensation. Congress first provided emergency 
loans; later it indemnified the growers at market prices, at a cost 
of approximately $9 million."^ It was, by any standard, an ex- 

found free of aminotriazole. Thirty lots totalling over 300,000 pounds were 
found to be contaminated and were seized. Lots which were cleared and 
passed, either by FD.-\ or by independent laboratories using approved meth- 
ods, were authorized to bear labels stating that they had been cleared by 
the U.S. Government. 

In early January 1958 [sic] the cranberry industry advised USD.^ that as 
of December 31, 1959, approximately 21.5 million dollars worth of cran- 
berries had become surplus. 
See also Hearings, supra note 115, at 8-9. 

"''.According to Dr. Boyd Shaffer, an .■\merican Cyanamid Company scientist 
who carried out the experiments, the results were not applicable to humans: a hu- 
man being "would have to eat 15,000 pounds of [contaminated] cranberries a day 
for many years" to sustain any ill effects. N.Y. Times, Nov. 12, 1959, at 20, col. 5. 
See also Austern, Sanctions in a Silhouette, in VV. Gellhorn & C. Byse, Admin- 
istrative Law 672 (4th ed. i960); N.Y. Times, Nov. 11, 1959, at 29, cols. 2-3. 

"^ The facts are summarized in a recent internal FDA memorandum, see note 
116 supra: 

From January 8 to February 10, 1969 [5/VI, USD A designated the major 
cranberry producing states as areas where the Farmers Home Loan .Admin- 
istration could make emergency loans to eligible cranberry growers. During 
the six-month period ending June 30, i960, the Farmers Home Loan .Ad- 
ministration loaned about $333,000 to 30 cranberry growers. 

On March 30, i960, the White House announced the establishment of a 
program to make indemnity payments to cranberry growers who, through 
no fault of their own, had sustained losses in cranberries harvested in 1959. 
No payments were to be made for cranberries found to be contaminated. 
The indemnity payments were I'lnancied [sic] under the authority of the 
USD.A. to encourage the domestic consumption of agricultural products by 
purchasing and diverting them from normal channels for use by needy per- 
sons (7 U.S.C. § 6i2c). 

.After eliminating claims not eligible for payment under the program, 
USD A paid approximately 8.5 million dollars to 12 claimants, representing 
1,215 growers, for about 1.13 million barrels of cranberries. Of these 1.13 
million barrels, about 518,000 were sold commercially by the growers (who 
had received from USDA a maximum indemnity payment of $8.02 a barrel) ; 


pensive news conference."" 

As this first recall illustrates, widespread publicity warning 
that a food is dangerous to public health has an immediate and 
perhaps irreversible impact. The public's sensitivity, at least to 
food hazards, has a low threshold.^-" Publicity identifying food 
dangers is therefore a potent weapon, and used carefully and se- 
lectively it can be efficient and effective. Hence, FDA procedures 
safeguarding recalls are all-important. 

FDA recalls fall into two categories, and the agency's use of 
publicity varies accordingly.'^^ Serious, or Class I, recalls in- 
volve immediate threats to consumer health; less significant, or 
Class II, recalls involve potential threats to health and safety, 
economic harm, or other statutory violations. While all are noted 
weekly in the FDA's "public recall list," only public warnings 
issued by the Commissioner of Food and Drugs are given exten- 
sive media coverage, and these are limited to Class I recalls. '" 

Recognizing that Congress has not expressly authorized the 
recall program, the FDA nevertheless makes several arguments 
in support of its use of adverse publicity as a coercive device for 
removing defective products from the market in Class I recalls. 
Since the program was developed in response to the practical 
limitations of the seizure action, representatives of the FDA occa- 
sionally assert that its recall program is merely an interstitial 
supplement to its formally-authorized sanctions. More frequent- 
ly, the same argument is asserted in a somewhat more sophisti- 
cated fashion. The FDA argues that its authority is implicit in 
its statutory framework: that the agency's mandate to protect 
consumers from adulterated, misbranded, and illegally-marketed 
products carries with it an implied authority to take all reasonable 
steps, not otherwise denied, to carry out that discretion.'-'^ The 

about 555,000 barrels were destroyed under USD.'\-State supervision; and 

about 58,000 barrels were accounted for by dehydration or spoilage. 
See also Hearings, supra note 115, at 11; 106 Cong. Rec. 9862-63 (i960). 

"®FD.\ recalls have expanded gradually since the cranberry episode. Initially 
applied only when the defective product posed a serious hazard to health, the recall 
program was broadened, first to include less serious health violations and economic 
injury, and then even minor short-weight breaches. See House Recall Report 3. 
The size of the program has increased along with its scope. Ten years ago, FD.\ 
recalls effected averaged fewer than 100 products per year; in fiscal 1970, about 
1400 recalls were instituted. Id. at 3, 9. The number of court-ordered seizures and 
injunctions has decreased proportionately. Id. at 8. 

'^"This is in contrast with the public's relative indifference to dangers of auto- 
mobiles. See pp. 1416-18 ififra. 

'""'See 21 C.F.R. § 3.85 (1972). 

'^^ Interview with Robert Brandenburg, Director, FDA Compliance Regula- 
tions Policy Staff, in Rockville, Md., Aug. 15, 1972; see FDA, Regulatory Pro- 
cedure Manual chs. 5-00-10.^.18, 5-00-40 (1971). 

^^^The Supreme Court recently demonstrated a willingness to recognize the 


FDA can point to the usual vague grants of authority in its en- 
abling act in support of these arguments.'-^ 

The primary justification for the recall program and the ad- 
verse publicity on which it relies, however, is the FDA's express 
statutory authority to publish reports and publicize hazards con- 
nected with foods and drugs. Section 705(b) of the Food, Drug, 
and Cosmetic Act of 1938 authorizes the FDA to "disseminate 
information" warning the public about foods and drugs that may 
cause "imminent danger to health or gross deception of the con- 
sumer." ^-'' Because the FDA limits publicized recalls to Class I 
cases involving "present threats to the safety of consumers," it 
contends that the recall program is appropriate to the statutory 
design.'-''' The statute does not require the FDA to hold hearings 
before issuing publicity, nor need the agency seek judicial ap- 
proval as required for seizure of defective goods.'-' In fact, the 
present recall procedure may be more restrained than section 
705(b) would require. The agency relies primarily upon com- 
munications to manufacturers and their distributors, while a strict 
reading of the statute arguably permits unrestrained agency 
warnings whenever public health is imperiled or gross deception 
is possible, even when the Act is not violated.'-^ 

Congressional and industry critics have nonetheless sharply 
condemned the recall procedure and the arguments on which it 
is based. Congressmen have pointed out that injunctions and 
seizures are the only authorized sanctions and have asserted that 
even assuming the proposition that the FDA needs more power, 

most tenuous grounds for FDA authority over drugs. See Weinberger v. Hynson, 
Westcott & Dunning, Inc., 41 U.S.L.W. 4848 (U.S. June 18, 1973)- 
^^*See 21 U.S.C. § 371(a) (1970). 


The [FDA] may also cause to be disseminated information regarding food, 
drugs, devices, or cosmetics in situations involving, in the opinion of the 
[FDA], imminent danger to health or gross deception of the consumer. 
Id. § 37S(b). 

^^^ Interview with Robert Brandenburg, Director, FDA Compliance Regula- 
tions Policy Staff, in Rockville, Md., Aug. 15, 1972. 

'"5ee Hoxsey Cancer Clinic v. Folsom, 155 F. Supp. 376 (D.D.C. 1957) (FDA 
permitted to release adverse publicity without prior hearing) ; J. Young, supra 
note 114, at 386-88. See also Developments in the Law — Deceptive Advertising, 
80 Harv. L. Rev. 1005, 1115 (1967): 

Since, in contrast to section 705(a), the [FDA's] power of publicity under 

this section requires no prior judicial determination of a violation, section 

705(b) represents a potentially independent administrative sanction. 

But see Austern, Is Government by Exhortation Desirable?, 22 Food, Drug, Cosm. 

L.J. 647, 650 (1967), where it is argued that Congress granted the FDA only 

limited power of publicity. 

'^® All recalls, on the other hand, are limited to products in violation of the 
Act. See 21 C.F.R. § 3.85(d)(1) (1972). 


the necessity does not justify such an arrogation of authority. ^^® 
Section 705(b), some critics argue, is Hmited to emergencies such 
as those posed by accidental, poisonous contaminations of a food, 
drug, or cosmetic. ^^" Furthermore, it can be argued that if recalls 
were part of the legislative design. Congress would have author- 
ized them specifically as it did, for example, when it regulated 
motor vehicles. '^^ Finally, recall procedures are not precisely 
articulated. When the FDA finally adopted regulations to govern 
recalls, long after the program had become the agency's chief 
enforcement weapon, they did not define "the circumstances under 
which a recall rather than seizure action is to be initiated and the 
rights of those adversely affected by recalls." ^^^ A committee of 
Congress has aired charges that recalls, uncontrolled by statute 
and limited only by vague regulations, are frequently misused and 
that adverse publicity is applied as a sanction in inappropriate 
cases. ^^^ While industry critics, like those in Congress, have 
argued that recalls are essentially ultra vires and are in any event 
less effective than seizures, businessmen have been primarily con- 
cerned with the overwhelming and uncontrollable impact of FDA 

'^®See House Recall Report 3. See also Hearings on FDA Oversight of Food 
Inspection Activities of the Federal Government Before the Subcomm. on Public 
Health & Environment, House Comni. on Interstate and Foreign Commerce, gad 
Cong., ist Sess., ser. 92-51 (1971) ; Hearing on Recall Procedures of the Food 
and Drug Administration Before the Subcomm. on Intergovernmental Relations of 
the House Comm. on Government Operations, gad Cong., ist Sess. (1971). For a 
comment critical of the unfairness of congressional oversight of the FDA, see 
Austern, Drug Regulation and the Public Health: Side Effects and Contraindica- 
tions of Congressional Committee Post Hoc Judgments, 19 Food, Drug, Cosm. 
L.J. 259, 269-71 (1964)- 

^^^ See Austern, supra note 117, at 673. See generally Austern, supra note 127, 
at 647, 650. 

*^' 5ee pp. 1416-17 infra. As in the case of auto recalls, removal under FDA 
supervision is not classified as a recall and no public release is issued when none of 
the defective food products have left the direct control of the manufacturer or 
primary distributor. 21 C.F.R. § 3.8s(d)(2) (1972). 

*^^ House Recall Report 3. 

^^^ See Hearings on FDA Oversight, supra note 129. 

^^* See, e.g., Hagan, Recalls — Legal Considerations, 27 Food, Drug, Cosm. L.J. 
344 (1972); Kasperson, Food, Drug and Cosmetic Law Section Recall Panel, id. 
at 349; Markel, Problems in the Administration and Enforcement of Food Laws, 
25 Food, Drug, Cosm. L.J. 429, 435-38 (1970); Thompson, Problems Relating to 
Enforcement of Food and Milk Laws and Regulations : Industry Viewpoint, 26 
Food, Drug, Cosm. L.J. 288, 292-93 (1971). 

The uncontrollable impact occurs because agency publicity directed toward one 
product or practice of a large, multiproduct enterprise may result in public rejection 
of other products. For example, FDA recalls of canned beans by Stokely-Van 
Camp allegedly had a significant impact on sales of other Stokely products. 
Washington Post, June 25, 1972, at K4, col. 2. See also note 142 infra. And when 


In its subsequent handling of what at first appeared to be an 
identical incident involving Campbell Soup Company's chicken- 
vegetable soup, the FDA apparently sought a more restrained 
approach. In late August 1971, Campbell discovered botulin in 
a test can of its soup and began an immediate recall of 4,799 cans 
after notifying the FDA.^^'-' The company announced that it 
would refund all purchases. The campaign reached 92 percent 
of all customers in the affected areas and cost Campbell $5 million. 
Although Campbell and the FDA both publicized the warning, 
little adverse effects resulted, largely because the FDA's subse- 
quent announcements commented favorably on Campbell's com- 
pliance with the recall program. 

Superficial distinctions can be made to explain the differing 
actions taken by the FDA in the Bon Vivant and Campbell cases. 
The Bon Vivant soup had actually caused death and illness; the 
Campbell's soup had not. Campbell discovered the defect in its 
own product and voluntarily reported it to the FDA. However, 
it has been asserted that because the company was a small, family- 
owned producer, less able to defend itself than an industry giant 
like Campbell, the FDA made an example of Bon Vivant in 
order to demonstrate its tough stance in favor of consumer pro- 
tection. ^^° Such arguments might be plausible if the FDA had 
offered no other reasonable explanation for the differences in the 
cases. The difference in treatment was, however, carefully and 
persuasively explained by Dr. Charles Edwards, the Commission- 
er of the Food and Drug Administration.^*^ 

^^^ See Hearings on FDA Oversight, supra note 129, at 165-83, 221-25, 235. 
For descriptions of the Campbell episode, see HEW, Release No. 71-52 (Aug. 31, 
1971) ; N.Y. Times, Aug. 23, 1971, at i, col. 2. 

^"^ See, e.g., Hearings on FDA Oversight, supra note 129, at 459-69; Collier, 
supra note 134, at 16-17; Kasperson, supra note 134, at 352-53 (1972) ; Washington 
Post, June 25, 1972, at Ki, col. i. 


In both the Bon \'ivant and Campbell situations, we required the firms to 
recall all suspect codes if they had not already started to do so. In each case, 
we commenced a surveillance of the recall. The extent of the recalls differed 
because the circumstances were different. In the Bon Vivant situation, we 
found by intensive investigation that one can sealer was not functioning 
properly and one retort (cooker) was undercooking. Normally the firm's 
records would reveal exactly which can codes or products were produced 
using the defective equipment. 

This would enable the agency and the firm to selectively recall suspect 
products. In the Bon Vivant case, these production defects were coupled 
with .a totally unreliable recordkeeping system, and a finding of abnormally 
high percentages of defective cans throughout the entire line. This being so, 
we were compelled to consider all cans produced by Bon X'ivant as suspect. 
In the Campbell situation, inspection showed the equipment to be func- 
tioning properly. The records were shown to be reliable, and the percentage 
of defective cans confined to certain products. It was these products, there- 
fore, that were recalled. 
Hearings on FDA Oversight, supra note 129, at 127. 


In its subsequent handling of what at first appeared to be an 
identical incident involving Campbell Soup Company's chicken- 
vegetable soup, the FDA apparently sought a more restrained 
approach. In late August 1971, Campbell discovered botulin in 
a test can of its soup and began an immediate recall of 4,799 cans 
after notifying the FDA.^^^ The company announced that it 
would refund all purchases. The campaign reached 92 percent 
of all customers in the affected areas and cost Campbell $5 million. 
Although Campbell and the FDA both publicized the warning, 
little adverse effects resulted, largely because the FDA's subse- 
quent announcements commented favorably on Campbell's com- 
pliance with the recall program. 

Superficial distinctions can be made to explain the differing 
actions taken by the FDA in the Bon Vivant and Campbell cases. 
The Bon Vivant soup had actually caused death and illness; the 
Campbell's soup had not. Campbell discovered the defect in its 
own product and voluntarily reported it to the FDA. However, 
it has been asserted that because the company was a small, family- 
owned producer, less able to defend itself than an industry giant 
like Campbell, the FDA made an example of Bon Vivant in 
order to demonstrate its tough stance in favor of consumer pro- 
tection.'^'' Such arguments might be plausible if the FDA had 
offered no other reasonable explanation for the differences in the 
cases. The difference in treatment was, however, carefully and 
persuasively explained by Dr. Charles Edwards, the Commission- 
er of the Food and Drug Administration.^*' 

^^^ See Hearings on FDA Oversight, supra note 129, at 165-83, 221-25, 235. 
For descriptions of the Campbell episode, see HEW, Release No. 71-52 (.^ug. 31, 
1971) ; N.Y. Times, Aug. 23, 1971, at i, col. 2. 

^*° See, e.g., Hearings on FDA Oversight, supra note 129, at 459-69; Collier, 
stipra note 134, at 16-17; Kasperson, supra note 134, at 352-53 (1972) ; Washington 
Post, June 25, 1972, at Ki, col. i. 


In both the Bon \'ivant and Campbell situations, we required the firms to 
recall all suspect codes if they had not already started to do so. In each case, 
we commenced a surveillance of the recall. The extent of the recalls differed 
because the circumstances were different. In the Bon Vivant situation, we 
found by intensive investigation that one can sealer was not functioning 
properly and one retort (cooker) was undercooking. Normally the firm's 
records would reveal exactly which can codes or products were produced 
using the defective equipment. 

This would enable the agency and the firm to selectively recall suspect 
products. In the Bon Vivant case, these production defects were coupled 
with a totally unreliable recordkeeping system, and a finding of abnormally 
high percentages of defective cans throughout the entire line. This being so, 
we were compelled to consider all cans produced by Bon Vivant as suspect. 
In the Campbell situation, inspection showed the equipment to be func- 
tioning properly. The records were shown to be reliable, and the percentage 
of defective cans confined to certain products. It was these products, there- 
fore, that were recalled. 
Hearings on FDA Oversight, supra note 129, at 127. 


The FDA's restraint in the Campbell case, however, hardly 
signaled the end of the agency's troubles with the recall process. 
On the contrary, recent recalls indicate that the problems raised 
by the 1959 cranberry episode still remain.^'*- The decision to 
initiate a recall with a public warning sometimes appears to result 
more from consumer-group and other pressures than from the 
persuasiveness of scientific data/^^ Of course, this problem is as 
much a question of the substance of FDA regulation as one of 
the particular enforcement procedures chosen, but where the 
substantive policy is uncertain, the case for "going public" with 
information likely to injure a firm or industry is less persuasive 
than it might otherwise be. 

The FDA probably cannot escape its duty to issue public 
warnings to protect consumers from poisonous foods. However, 
it appears that it also cannot resist the temptation of using such 
warnings to operate an extrastatutory recall program. Recog- 
nizing the need to broaden the variety of enforcement powers 
available to the FDA, the General Accounting Office recently 
recommended to Congress not only that the agency be given stat- 
utory recall powers, but also that it be authorized to detain sus- 
pected dangerous products."^ FDA licensing and testing are 

'"^ So basic a question as the appropriate level of testing required before a 
public warning is issued has not been resolved. For example, on October 29, 1971, 
the FDA issued an urgent warning alerting the public that Stokely-Van Camp's 
"Finest French Style Sliced Green Beans" might be contaminated with botulin 
after the Center for Disease Control in Atlanta reported that a Marine captain and 
his son presumably had contracted botulism after eating the green beans. HEW, 
Release No. 71-66 (Oct. 29, 1971). Although only the son's tests were positive, the 
warning was widely publicized. It was then discovered that the positive test re- 
sults were caused by antibiotics taken by the son for a cold a week earlier, and 
not by botulism. The FDA warning was rescinded. HEW, Release No. 71-67 
(Nov. I, 1971). Stokely-Van Camp officials charge that this "false recall" cost 
the company millions of dollars in unjustified damages. See Washington Post, June 
25, 1972, at K4, col. 2. FDA Commissioner Charles C. Edwards contended, how- 
ever, that public warnings should always issue when life or serious injury is 

"In dealing with life or death problems like botulism, there are times when 

the public interest demands action before the scientific case is complete. The 

decision always must be made in favor of consumer protection." 

HEW, Release No. 71-67 (Nov. i, 1971). Another and probably more accurate 

explanation for the recall is that the FDA bowed to pressure from Florida health 


^*^ The recent destruction of the swordfish industry on the basis of question- 
able scientific data is an example. See Note, Health Regulation of Naturally 
Hazardous Foods: The FDA Ban on Swordfish, 85 Harv. L. Rev. 1025, 1026-33 
(1972). Nor is this a unique example. Similar recent controversies include FDA 
action on monosodium glutamate, DES, and cyclamates. See, e.g., Wall Street 
Journal, July 2, 1973, at i, col. 4 (new studies contradict cancer evidence on which 
FDA banned sweeteners). 

^** See Comptroller General of the United States, supra note iii, at 1-4 


alternative, though not necessarily preferable, solutions. ^''^ Such 
authorization may allow the FDA to protect the public without 
resorting to damaging publicity; clearly the FDA should seriously 
explore these and other alternatives.^**' 

2. The National Highway Traffic Safety Administration and 
Deject Notifications. — Concerned with increasing highway traf- 
fic accidents, appalled by the number of deaths and injuries to 
motorists, and aroused by Ralph Nader's book on auto safety 
followed by General Motors' snooping into Nader's private life, 
Congress approved legislation in 1966 to create and enforce motor 
vehicle safety standards. ^^^ Today the National Highway Traffic 
Safety Administration (NHTSA), a division within the Depart- 
ment of Transportation, carries out this mission. The Adminis- 
tration investigates safety defects, writes safety standards, and 
ensures manufacturer compliance. Although manufacturer viola- 
tions can lead to civil penalties and injunctions enforceable by 
criminal contempt, the statutory scheme relies primarily on com- 
pliance with announced safety standards by automobile manu- 
facturers and on direct notice from manufacturers warning 
dealers and purchasers of defects and advising them of needed 

In many respects, NHTSA vehicle defect notification cam- 
paigns are indistinguishable from FDA food recalls. NHTSA 
relies primarily on the automobile manufacturer to warn the 
owner that the product is defective; NHTSA itself ordinarily 
issues warning publicity only if the defective product is no longer 
within the manufacturer's control. But unlike the FDA recall 
process, NHTSA's defect notification procedure is statutorily 
authorized. ^^^ The authorization does not, however, entirely clar- 

( recommending that the FDA be granted power to obtain access to production 
and distribution information, power to detain suspected or known defective prod- 
ucts, and power to enforce recalls) . The Department of Agriculture already has 
similar inspection and detention authority for poultry and meat. 21 U.S.C. §§ 
451-70, 601-95 (1970); see Cody, Food Recalls, 27 Food, Drug, Cosm. LJ. 336, 

343 (1972). 

*■*' Cf. S. Peltzman, The Benefits and Costs of New Drug Regulation, 1972 
(paper delivered to the Center for Policy Study, University of Chicago, to be 
published in the Journal of Political Economy) . 

'"^In addition, testing standards should be reviewed and recall procedures 
further defined, and the use of publicity likely to have adverse consequences should 
be more selective. See p. 1427 infra. For a discussion of statutory authorization, 
see pp. 1424-25 infra. 

'"■'National Traffic & Motor Vehicle Safety Act of 1966, 15 U.S.C. §§ 1381- 
1431 (1970). See generally Note, Federal Motor Vehicle Safety Legislation, 29 
Ohio St. L.J. 177 (1968). 

'"* 15 U.S.C. § 1402 (1970). For NHTSA's authority to establish standards, 
see id. §§ 1392, 1397, 1403. 

^"^ Id. § 1402; cf. pp. 1410-11 supra. 


ify the agency's publicity powers. An express grant of defect 
notification power, particularly in the absence of explicit publicity 
power such as that given the FDA/'^*' might limit the agency's 
authority to requiring manufacturer notification. NHTSA argues, 
however, that it has implied authority to issue publicity not only 
to inform the public about safety defects, but also to warn car 
owners who might not otherwise be reached.^'"'' But this use of 
public warnings also serves as a sanction to deter manufacturers 
from future quality control failures. Furthermore, the threat of 
publicity serves to coerce manufacturers to fulfill their statutory 
recall duties. 

Consumer groups complain that NHTSA does not impose 
sufficiently rigorous notification requirements on manufacturers 
and that the agency's own publicity efforts are ineffective. The 
automobile industry, on the other hand, complains that premature 
agency publicity releases and information leaks deny manufac- 
turers a fair chance to reply to charges or investigate alleged 
defects. ^^ 

Despite these criticisms, auto makers are generally more 
pleased with NHTSA's publicity procedures than food producers 
are with the FDA recall system. This is probably due in large 
measure to the inherent differences in the products. Because the 
public apparently perceives food contamination to be a much 
greater danger than automobile safety defects, NHTSA publicity 
is likely to have less adverse effect on regulated parties than FDA 
publicity, even though the incidence and significance of likely 
harm from auto safety defects usually exceeds that resulting from 
contaminated food. The causes of public insensitivity to NHTSA 
publicity are not entirely clear. Perhaps it is because the public 
has concluded that unsafe cars are inevitable while unhealthy 
food is not. Differences in the markets may also explain some of 
the differences in the impact of the agency warnings. Competitive 
pressures in the food processing industry probably exceed those 
in the automotive or tire industries, ^'^•^ and the consumer's oppor- 

'^°2i U.S.C. § 37S(b) (1970); see p. 1408 supra. 

^^^ Interview with Richard Dyson, Assistant Chief Counsel, NHTSA, in Wash- 
ington, D.C., Aug. 29, 1972. 

^^^The industry's "unfair surprise" argument is, however, unpersuasive, since 
the news media regularly seek the manufacturer's response before releasing a 
story, especially in important cases. Moreover, manufacturers are frequently aware 
of NHTSA's conclusions before they are made public; in fact, auto makers some- 
times participate in the Administration's tests and frequently negotiate with the 
agency on the scope of formal notice. In any event, although the fairness of 
administrative procedures theoretically should not depend on the wealth of those 
an agency regulates, most automobile manufacturers are economically powerful 
enough to counter NHTSA publicity. 

^^^ See R. LiPSEY & P. Steiner, Economics 266-68 (3d ed. 1972). 


tunity to react to adverse publicity by shifting his purchases is 
correspondingly greater with respect to the food industry. More- 
over, unit prices are much lower for food than for automotive or 
tire products, the lifespan of food products is much shorter, and 
consumer loyalties and brand differentiation among food products 
are considerably lower. ^''^ Thus, even if consumers were not 
indifferent to NHTSA publicity, its immediate impact might be 

Another possible explanation for the relative consumer in- 
difference to NHTSA warnings may be "notice saturation": 
NHTSA warnings stream forth constantly, affecting almost every 
make and model of automobile; the agency gives about the same 
publicity to all defects, regardless of their seriousness, and most 
defect notices are no longer newsworthy. In contrast, FDA warn- 
ings are relatively few, at least when compared with the number 
of firms and products in the industry, and they do draw public 
interest when the number of potential victims is substantial or 
the possibihty of injuries is severe. In short, NHTSA's diligence 
may have dissipated rather than heightened public interest.'''^ 

There are also differences between the publicity procedures of 
the FDA and of NHTSA. ]\Iotor vehicle defect notifications often 
occur months after the defect is first suspected, and they are 
usually preceded by lengthy and thorough testing in which the 
manufacturer has a chance to participate. NHTSA ordinarily 
notifies the public that a model is being investigated or has failed 
a performance test in interim monthly announcements or a special 
consumer protection bulletin. After NHTSA first announces a 
serious defect by this method, as it did in the case of Corvair 
heaters and Chevrolet engine mounts, it gathers substantial evi- 
dence, notifies the manufacturer, and runs preliminary tests. Only 
then is the focused warning publicity issued. The automobile 
manufacturer is therefore unlikely to be the victim of erroneous 
agency publicity. ^^^ 

^^'^ See J. Bain, Industrial Organization 236-40 (2d ed. 1968). See also FTC, 
Economic Report on the Influence of Market Structure on Profit Per- 
formance OF Food Manufacturing Companies (Staff Report 1969) ; United 
States Xat'l Comm'n on Food Marketing, Technical Studies Xos. 4, 6-8 
(1966) ; Collins & Preston, Concentration and Price Margins in Food Manufac- 
turing Industries, 14 J. Indus. Econ. 226 (1966). 

^^^ Cf. p. 1427 infra. A related factor is the nature of the investigation. Con- 
taminated foods involve scientific examination, and few consumers feel in a 
position to challenge the FD.\'s conclusions. Automobile defects, on the other 
hand, usually involve mechanical problems concerning which many consumers 
believe themselves competent — or at least rate the government agency less highly. 
In actuality, the contrary attitudes would be more realistic, since FD.\ warnings 
may follow only preliminary testing whereas NHTS.\ notices are usually preceded 
by extensive testing and consultation. 

*^* There are, however, occasional vigorous disputes between the agency and 


Although NHTSA enjoys a statutory "recall" program FDA 
lacks, it also resorts to the extrastatutory measure of adverse 
publicity both to warn the public and to coerce compliance with 
its recall program. Representatives of NHTSA admit that it has 
not subjected its publicity program to rigorous examination. No 
rules or regulations govern the agency's publicity. However, in- 
ternal checks and procedures have developed from custom, habit, 
and natural bureaucratic caution. Not insignificant, undoubtedly, 
is the existence of effective industry pressure on the agency. Prob- 
ably fearing that it will jeopardize the effectiveness of its sub- 
stantive program with irresponsible publicity, NHTSA generally 
acts cautiously, and there has evidently been little abuse in its 
adverse publicity practices. 

n. The Control of Adverse Agency Publicity 
A. The Need for Control ^" 

Adverse publicity causes concern for two primary reasons. 
First, it imposes a deprivation on private persons or firms without 

the manufacturers it regulates over the content of press releases issued by each. 
NHTSA, for example, objected to Ford Motor Company's advertisements regard- 
ing the ineffectiveness of air bags as a passive restraint, and it issued counter- 
publicity. Or a manufacturer's recall may fail to mention that it was precipi- 
tated by an NHTS.\ investigation or it may be worded too benignly ; the agency 
then frequently issues a "reactive" release announcing its own views. NHTSA also 
concedes that some of its releases have contained errors — especially as to whether 
the recommended repair would be accomplished under the manufacturer's warranty 
or at the owner's expense. Interview with Richard Dyson, .Assistant Chief Counsel, 
NHTS.\, in Washington, D.C., .^ug. 29, 1972. 

^^'' See generally F. Rourke, supra note 65, at 13-17; Note, Disparaging Pub- 
licity by Federal Agencies, 67 Colum. L. Rev. 1512, 1513-18 (1967). 

There is, of course, another more basic question which also deserves consider- 
ation — namely, whether government agencies should issue any publicity, either 
adverse or favorable. The information publicized by an agency is wanted only by 
some ; publicity is not usually desired by those adversely affected, a view shared 
as well by many others who cannot use it. Thus, adverse agency publicity designed 
to inform seems justifiable only if the agency can distribute the information more 
efficiently than private organizations to those wanting it or if it serves some other 
public purpose. On the other hand, it 'seems clear that many agency publicity 
functions already duplicate private information systems, which are supported by 
those willing to pay for the information. See generally A. Alchian & W. Allen, 
University Economics; Elements of Inquiry 35-49 (3d ed. 1972). In addition, 
a market system has the advantage of permitting each consumer an opportunity 
to "vote" his preference by choosing to buy or not to buy the service. Competitive 
pressures in this "information market" would maximize resource allocation (since 
the information supplied would be determined by demand) and minimize cost 
(since specialization in information services and competition would increase efficiency 
and reduce prices). See id. at 199-232, 311-48. Those unwilling to pay the publicity 
charge would not be forced to shoulder the cost. In addition, they would be free 
of government coercion, since individuals would not be required to support an 


the due processes of law normally associated with government 
action encroaching upon property or persons. Formal orders from 
administrative agencies are preceded by notice with an opportu- 
nity for hearing, and the orders are often supported by a reasoned 
decision. ^^* But usually no protection other than the common 
sense and good will of the administrator prevents unreasonable 
use of coercive publicity. Furthermore, judicial review cannot 
undo the widespread effects of erroneous adverse agency publicity. 
The result is that the person or industry named may be irretriev- 
ably injured by inaccurate, excessive, or premature publicity.^^^ 

unwanted service. See generally M. Friedman, Capitalism and Freedom 7-36 
(1962). Equally significant would be the desirable by-product that the existing 
tort system of private remedies would be available to compensate for abuses. See 
generally W. Prosser, Handbook of the Law of Torts §§ 111-16, 128 (4th ed. 
1971) (defamation and injurious falsehood). Moreover, since government im- 
munity and the absolute tort immunity of government officials, see id. at 970-92, 
are inapplicable in the private sector, many of the fairness and all of the procedural 
questions raised in this Article would disappear. 

It can be answered that agency publicity serves an overriding public purpose. 
Nonpurchasers should be warned or informed where their welfare requires it. 
Moreover, agency information should not be restricted to the wealthy or the 
specially interested; the Government has an obligation to protect the disadvan- 
taged or ignorant as well as the affluent. Nor is it clear that an effective and 
efficient private information market is a practical possibility. 

'^* Agencies ordinarily are required to give notice and an opportunity for a 
hearing before entering a formal administrative order that adversely affects a 
private interest. See .Administrative Procedure Act §§ 5-8, 5 U.S.C. §§ 554-57 
(1970). See also Greene v. McElroy, 360 U.S. 474, 496-97 (1959); Administrative 
Procedure Act § 4, 5 U.S.C. § 553 (1970) (rulemaking authority); E. Gellhorn, 
Administrative Law and Process in a Nutshell 133-34 (1972). 

Since most objections to agency publicity disappear when it issues after a 
hearing is held, the comments and recommendations offered in this .Article generally 
relate to adverse publicity disseminated before the named respondent has had an 
opportunity to show that the release is inaccurate or before the agency has made 
a deliberate decision ; only occasionally are they directed against excessive publicity. 
At one time it was strenuously argued that pretrial press releases were also 
prejudicial because they demonstrated agency prejudgment. See, e.g., Note, supra 
note 157, at 1513-14. However, as the combination of functions within adminis- 
trative agencies was accepted and the concept of institutional separation under- 
stood, this objection generally disappeared. And current channels for judicial re- 
view adequately protect the fairness of agency hearings. See, e.g., Texaco, Inc. v. 
FTC, 336 F.2d 754 (D.C. Cir. 1964), vacated and remanded on other grounds, 381 
U.S. 739 (1965)- 

'*®For example, in the cranberry episode, see pp. 1408-10 supra, as a Wash- 
ington attorney has noted, there was 

great economic loss, and perhaps lasting injury, without any hearing or 
review on the facts . . . No lawyers . . . were consulted, and no admin- 
istrative procedures were even considered. . . . Never forget that the 
publicity sanction — that omnibus condemnation by press release — goes 
forward without formal evidence, without any opportunity for hearing, 
without counsel and, of course, without the remotest possibility of court 
Austern, supra note 117, at 672-74. Nor is compjensation by private bill or executive 


Second, agencies sometimes use adverse publicity as an un- 
authorized sanction, as the CLC has done to enforce its Phase I 
dividend restraint poHcy/*^" Such use can damage an agency's 
stature in the eyes of the regulated industries. Furthermore, 
agency reliance upon publicity as a sanction may stunt the de- 
velopment of legal sanctions and leave novel doctrines untested. ^''^ 
By resorting to ad hoc methods of coercion, agencies circumvent 
the visibility of legislative approval of sanctions and may even 
frustrate the legislature's intent to limit their power to coerce. ^^^ 

In this section of the Article, standards will first be proposed 
whereby agencies can control and legitimize their uses of adverse 
publicity. Second, new avenues for judicial scrutiny of adverse 
publicity will be suggested, although admittedly the primary re- 
sponsibiHty must fall on the agencies' internal controls, which 
alone operate before publicity issues. Finally, legislative mea- 
sures for reform will be discussed, including greater specificity 
in delegations of authority to agencies and reform of the Federal 
Tort Claims Act. 

B. Controls on Publicity and the 
Freedom of Information Act 

Before proposing methods for controlling the use of agency 
publicity, one must distinguish such controls from agency infor- 
mation practices that permit public access to agency records in 

action necessarily adequate protection ; it covers only readily identified losses and 
offers a salve only for the powerful and persistent. 

^^°5ee pp. 1404-05 supra. See generally Part I. C. supra. 

'®' See generally Elman, Administrative Reform of the Federal Trade Com- 
mission, 59 Geo. L.J. 777, 820-45 (1971) ; cf. Spritzer, Uses of the Summary Power 
to Suspend Rates: An Examination of Federal Regulatory Agency Practices, 120 
U. Pa. L. Rev. 39, 42 (1971): "[T]he regulatory approach [of concern] adopted by 
the FCC, although expeditious in the short run, has . . . delayed the development 
of an adequate methodology of regulation, and resulted in a conspicuous failure 
to formulate visible and consistent standards." If ultimately subject to court 
review, preliminary exploration of novel methods outside the formal administra- 
tive process is not as objectionable. Compare ITT Continental Baking Co., [1970- 
1973 Transfer Binder] Trade Reg. Rep. H 19,681, at 21,727 (F.T.C. 1971) (consent 
decree requiring that respondent counter weight-reducing claims of prior Profile 
Bread advertisements), with Firestone Tire & Rubber Co., [1970-1973 Transfer 
Binder] Trade Reg. Rep. ^I 20,112 (F.T.C. Feb. 16, 1973) (adjudicative rejection 
of request for corrective advertising order) . The concern, however, is that publicity 
may be such a significant in terrorem threat that no respondent can challenge the 
lawfulness of the agency policy which it implements. See, e.g., Mulford, "Accelera- 
tion" Under the Securities Act of igjj — A Postscript, 22 Bus. Law. 1087 (1967) ; 
Mulford, "Acceleration" Under the Securities Act of 1933 — A Reply to the 
Securities and Exchange Commission, 14 Bus. Law. 156 (1958) ; cf. Final Report 
OF THE Attorney General's Comm. on Administrative Procedure, S. Doc. No. 
8, 77th Cong., ist Sess. 134-35 (i94i) (Federal Alcohol Administration). 

^^'^ See, e.g., p. 1399 supra (EEOC authority). 


accordance with the Freedom of Information Act.^**^ The latter 
involves a question of the availability of government information 
to the public. Agency publicity, on the other hand, involves 
affirmative action on the part of an agency or its personnel to 
bring information or activities to the attention of the public. The 
difference is particularly significant where the agency's affirma- 
tive steps cause or increase the harm suffered by the person 

With regard to the interests under the Freedom of Information 
Act, Congress has mandated that high priority be given to open- 
ness in government. However, this policy still places the primary 
burden of requesting and obtaining the information on the person 
seeking it; only reasonable requests are honored and the party 
desiring the information must pay for extensive searches as well 
as all copying costs. '''^ The congressional mandate with respect 
to publicity is quite different. Most government agencies lack ex- 
plicit authorization to issue adverse publicity,'*'*^ and what author- 
ization one can find limits the uses to which publicity may be 
put.'^^ Furthermore, questions of access arise at a different point 
in agency proceedings than questions of publicity. Adverse agency 
publicity frequently occurs either at an investigatory point when 
there is no significant interest in public access, '*^^ or at a point 
when the complaint is already in the public domain. '*^^ The main 
concern is therefore with fairness to the parties adversely affected. 
Access to information, on the other hand, seeks to uncover infor- 
mation on which investigation is complete but which has not yet 

'«^SU.S.C. § 552 (1970). 

^^* For example, the fact that EEOC's complaint before the FCC is a public 
document does not justify sensationalistic publicity applying public pressure on 
AT&T, just as EEOC's abuse of public FCC hearings is no reason for holding 
private proceedings. See pp. 1400-01 supra. 

When media coverage closely follows agency activities, affirmative publicity 
measures may be unnecessary because mere freedom of public access to informa- 
tion performs the same function. See, e.g., pp. 1394-97 supra (SEC publicity). In 
such a case, the issues involved in the Freedom of Information Act cannot be 
disentangled from adverse publicity issues. 

'"•"'FTC Procedures and Rules of Practice §§ 4.8(b)-(c), 38 Fed. Reg. 1730 
(1973). There is effectively a self-screening process which operates to limit public 
access to agency records. In fact, some critics claim these obstacles are too strong. 
See generally Nader, Freedom from Information: The Act and the Agencies, 5 
Harv. Civ. Rights — Crv. Lib. L. Rev. i (1970). 

^^^ See, e.g., pp. 1398-401 supra (EEOC) ; pp. 1403-06 supra (CLC). 

^^'' See, e.g., pp. 1411-12 supra (FDA). 

'®® Adverse agency publicity often involves unevaluated file data, see, e.g., 
pp. 1408-09 supra (FDA cranberry episode), tentative charges, see, e.g., p. 1390 
supra (FTC Part II complaints), or charges for which no legal sanctions exist, 
see, e.g., pp. 1404-06 supra (CLC publicity). 

^^^ See, e.g., pp. 1394-98 supra (SEC). 


been publicly disclosed/^^' Then, the main concern is with con- 
fidentiality and protection of governmental processes. 

C. Internal Controls 

Many of the problems of agency publicity appear amenable to 
internal control/^^ In the process of preparing publicity guide- 
lines such as the Department of Justice's publicity rules ^^^ and 
the FTC's public information pamphlet, ^^'^ an agency is forced 
to examine its practices and decide whether, when, and how ad- 
verse information should be publicized.^'* But even where agen- 
cies such as the FTC have articulated their standards for the use 
of adverse publicity, there is great need for reform. Extant in- 
ternal guidelines generally ignore the questions of whether alter- 
native sanctions or other methods of publicity are available, 
whether additional steps should be taken to assure the accuracy 

'''° Public access is seldom permitted to investigatory files, and even then the 
decisions seem questionable. See, e.g., VVellford v. Hardin, 444 F.2d 21 (4th Cir. 
1971), noted in 85 Harv. L. Rev. 861 (1972). Only occasional requests for access 
involve significant fairness issues, and even less frequently do these raise serious due 
process questions. See generally E. Gellhorn, The Treatment of Confidential In- 
formation by the Federal Trade Commission: Pretrial Practices, 36 U. Chi. L. Rev. 
113 (1968). 

'''* This is not to say that legislative and judicial relief should not be available. 
In fact, it will be recommended in this Article that courts undertake review of 
agency publicity more freely and that Congress amend the Federal Tort Claims 
Act to permit compensation for victims of adverse publicity on a regularized basis 
rather than by private bill. See C. Horsky, The Washington Lawyer 78 (1952) ; 
W. Gardner, The Administrative Process, in Legal Institutions Today and To- 
morrow 138-39 (M. Paulsen ed. 1959) ; Comment, Public Participation in Federal 
Administrative Proceedings, 120 U. Pa. L. Rev. 702, 718 (1972). See generally 
Section D, infra. But even these suggestions are offered primarily because of their 
likely effect on general administrative practice, not for the specific relief permitted 
injured parties. Judicial review can be an effctive check on the administrative 
process precisely because it can affect policies and practices as well as provide 
limited relief to specific parties. 

^■^-28 C.F.R. § 50.2 (1972). 

173 pjQ Publicity Guidebook. 

''''' The development of .agency policy and its presentation in written regulations 
is not always an unmixed blessing, however. Committing a bad policy to paper 
may hinder its demise, and obscure regulations supply only a semblance of policy. 
Written rules may become rigid and thus an excuse for not rethinking the question 
of how to exercise reasonable discretion. Cf. Abrams, Internal Policy: Guiding the 
Exercise of .Prosecutorial Discretion, 19 U.C.L.A.L. Rev. i, 29 (1971). Neverthe- 
less, staff size, personnel turnover, and short memories, as well as fairness to those 
subject to the procedure, generally require that administrative agencies rely on 
regularized policy procedures. The evidence seems to indicate that agencies which 
have not reduced their publicity policies to writing have not infrequently abused 
their powers; and agencies which have developed articulate programs are among 
those whose publicity practices seem more praiseworthy. Compare pp. 1388-93 
supra (FTC procedures), with pp. 1398-401 supra (EEOC procedures). 


of the publicity, or whether fairness for the victim of publicity 
can be improved by providing a forum for a reply or time for 
rebuttal. By resolving such issues, an agency can avoid abuse 
without rendering publicity techniques ineffective. 

I. Publicity Policy. — Several substantive questions should be 
resolved in the rules an agency writes to govern publicity. Among 
these are the questions of whether to issue publicity at all, at 
what point in the agency's actions the publicity should be re- 
leased, and how to control the contents of the publicity. 

(a) General Guidelines for Deciding Whether to Issue Ad- 
verse Publicity. — (/') Agency Authority. — The first question 
which an agency should address is whether a proposed use of 
publicity is statutorily authorized. Agency authority is important 
not only because agencies are theoretically confined to their dele- 
gated powers, but also because the acceptability and effectiveness 
of an agency's substantive programs can be defeated by resort to 
procedures whose legitimacy may be challenged, thereby divert- 
ing attention from the object of the agency's concern. Such au- 
thorization is not to be found in the typical agency mandate to 
"make pubHc . . . information obtained by it ... as it shall 
deem expedient in the public interest" ^"'^ or in the power to "make 
rules and regulations for the purpose of carrying out the provi- 
sions of this . . . title." ^^^ 

The problem is particularly acute when publicity functions 
to bolster an agency's enforcement powers. This study has shown 
that agencies frequently use adverse publicity to supplement 
their formal and informal sanctions. ^^" Publicity is quicker and 
cheaper; it is not presently subject to judicial review or other 
effective legal control; and it involves the exercise of pure ad- 
ministrative discretion. Publicity also helps to fill gaps between 
an agency's statutory goals and its statutory enforcement pow- 
ers.^'* However, the "need" for additional administrative en- 
forcement power should not be resolved by an agency's arrogat- 
ing such power to itself without congressional approval. ^''' 

'"Federal Trade Commission Act § 6(f), 15 U.S.C. § 46(f) (1970). 
,>'«/d. § 6(g), IS U.S.C. § 46(g). 

*"5ee, e.g., pp. 1404-06 supra (CLC). For many agencies publicity serves 
simultaneously as an authorized warning or distribution of information to the 
public and as unauthorized coercion against private parties; the FD.\'s use of 
publicity in its recall program is paradigmatic. See pp. 1407-16 supra. In such 
cases it would be an abdication of the agency's statutory duties to refuse to issue 
publicity on the ground of its unauthorized impact. However, when faced with 
such a dilemma, agencies must carefully weigh the impact upon their own credibility 
and prestige which may result from excessive use of publicity which achieves 
unauthorized ends. 

^''^ See, e.g., pp. 1398-401 supra (EEOC). 

"^ The best solution would be for Congress to face the choice of extending 
agency sanctions or of authorizing publicity as a .sanction. See p. 1435 injra. 


Not infrequently, the agency's mandate is dispositive of 
whether it should issue any adverse publicity. For example, pub- 
licity seems peculiarly appropriate for implementing the SEC's 
statutory scheme. ^*^" On the other hand, the mandate to the EEOC 
emphasizes private conciliation; and adverse publicity, particu- 
larly where it serves to coerce compliance with EEOC goals, seems 
contrary to the legislative intent. ^^^ If it appears in a particular 
case that the use of adverse publicity is at least colorably author- 
ized by statute, several other criteria should be considered before 
the agency determines to use it. Of these, the most important are 
the need for publicity, the availability of less harmful alterna- 
tives, the likelihood that the information is accurate and will be 
effective, and the degree of unwarranted harm that might result. 

(ii) Need. — What regulatory function is served by adverse 
publicity? If an FDA release, such as that regarding Bon Vivant 
vichyssoise,^^- warns the public about an immediate peril such as 
the danger of contaminated food, the need for speed and wide- 
spread notice to fulfill the FDA's statutory purpose is clear. The 
scope and the nature of public harm that may result if adminis- 

*®°5ee p. 1394 supra. 

^^^ See p. 1399 & note 70 supra. The proper role of publicity depends on the 
agency's function and authority. Thus the 1941 Attorney General's Report, in 
connection with the Federal Alcohol Administation's "indiscriminate use" of press 
releases to publicize every order instituting disciplinary proceedings against per- 
mit holders, concluded that the FAA 

relied upon threatened adverse publicity as an extra-legal sanction to secure 
observance of its commands, even when the validity of its dictates was not 
free from doubt. 

Such abuse of the power to publicize proceedings must be unqualifiedly 

The Committee notes its belief that there is rarely any strong justification 
for prior publicity in the cases which here arise. The sanctions provided by 
the statute, particularly the power to suspend the permit, should, if utilized, 
provide sufficient discouragement to the potential lawbreaker. Only rarely is 
it necessary to take rapid action in order to safeguard the public health 
or to prevent gross deception of consumers .... 
Final Report of Attorney General's Comm. on AoMiNisTRATrvE Procedure, 
S. Doc. No. 8, 77th Cong., ist Sess. 135 (1941). On the other hand, the Com- 
mittee did not disapprove of the SEC's publicity policies, see id. at 182-83, and its 
monograph on the Commission explained why the SEC's policies were justified in 
the normal case: 

First, it is abundantly clear that the [Securities and Exchange] Commission 
takes extraordinary precautions before instituting decisive proceedings . . . 
Under these circumstances, the danger of harm by publicity to a respondent 
who might ultimately be found innocent seems remote. Second, there are 
affirmative considerations of policy which support the policy of publicity. 
Where, .after its careful preliminary researches, the Commission is of the 
opinion that violations exist, it would seem to be contrary to the intent of 
the acts that the Commission should keep this secret and permit investors, 
for whose protection the acts were passed, to continue to be defrauded. 
Attorney General's Comm. on Administrative Procedure, Monograph on Se- 
curities AND Exchange Commission, S. Doc. No. 10, 77th Cong., ist Sess., pt. 13, 

at 53-54 (1941)- 

'^^ See p. 1 4 13 supra. 


trative publicity is not issued is another way of stating the regu- 
latory need. However, if the function were merely to inform the 
public about FDA vigilance and the resulting safety of foods and 
drugs, there would seem to be little reason to identify particular 
products or firms, at least prior to formal adjudicative determina- 
tion. Where there is considerable doubt whether Congress in- 
tended the agency to warn the public against a product or firm, 
the use of so gross a warning or informational tool as adverse 
publicity should be seriously questioned. Thus, for example, it is 
difficult to justify the ruination of an entire cranberry crop on 
the ground of evidence such as that facing the FDA in 1959.^^^ 

(Hi) Alternatives. — Can the interests served by adverse 
publicity be protected in less harmful but equally effective ways? 
If an FTC complaint relates to a continuing practice or advertise- 
ment — for example, the Zerex advertisement — the respondent 
should be allowed the alternative of discontinuing the challenged 
activity pending the litigation.^''* Because adverse publicity is 
usually a deprivation not subject to effective judicial control, it 
should usually be a sanction of last, not first, resort. If statutorily 
authorized, other remedies such as injunctions, seizures, and sum- 
mary administrative actions should be considered before indis- 
criminate adverse publicity is employed. ^^^ 

(iv) Accuracy and Effectiveness. — How reliable is the infor- 
mation on which the agency publicity is based and what is the 
likelihood that it will effectively influence the public? Mistakes 
such as the Cost of Living Council's dividend announcement ^®^ 
or the FTC's accusations against Zerex ^^'^ are costly to the 
agency's prestige and program as well as to the injured person. 

^^^ See pp. 1408-09 & note 117 supra. 

^^* See E. Gellhorn, supra note 170, at 142. This suggestion is also appropriate 
where past practices have already resulted in distribution of the allegedly defective 
product or resulted in public deception, and the charge is disputed. In such cases, 
the agency announcement is unlikely to return the warned consumer to the status 
quo ante. For example, the FTC did not expect purchasers of Zerex antifreeze to 
replace their radiator coolant several months into the winter season merely because 
the Commission announced that the product might cause harm to some automobile 
radiators. And if the FTC's recent experience with attempting to show the "linger- 
ing effect" of deceptive advertising is indicative, its adverse publicity cannot be 
justified as countering past practices. See, e.g., ITT Continental Baking Co., [1970- 
1973 Transfer Binder] Trade Reg. Rep. H 20,182 (F.T.C. 1972). 

**^ Moreover, the manner and type of agency publicity may be viewed as a 
spectrum of alternatives. That is, a more restrained announcement or the inclusion 
in the agency announcement of respondent's reply may alleviate the harm and 
increase the accuracy of the disseminated news, yet still satisfy the administrative 
policy justifying the release. See p. 1430 infra. 

^^^ See pp. 1404-05 supra. 

'^^ See pp. 1391-92 & notes 38-40 supra. 


The public warning about Stokely-Van Camp's green beans/** 
which turned out to be harmless, not only cost the company mil- 
lions of dollars, but also reduced the credibility of the FDA. 

Moreover, when publicity is not selectively issued, it is likely 
to be ineffective. Typical are NHTSA's announcements of re- 
calls ^^^ and the FTC's automatic press policy for Part II com- 
plaints.^^" In a technical sense, the present policy assures that 
the public is informed of every FTC complaint and may, if 
necessary, take warning from it. In reality, the public is drowned 
in a sea of notice and a benumbed press ignores many of the 
FTC's warnings, even those which raise significant issues of 
public safety, such as the announcements of flammable-fabric 
actions. The FTC's problems might be avoided or minimized if 
the Commission adopted a policy of selective publicity. The FTC 
could limit the use of publicity to cases in which it was necessary 
to warn the public about imminent danger and to significant ac- 
tions requiring explanation to prevent misunderstanding. 

The chief arguments in favor of the present automatic-pub- 
licity policy — that it ensures accurate news coverage by explain- 
ing technical legal charges and enhances administrative efficiency 
by funneling all press inquiries to the Information Office — are 
no less applicable to selective publicity. Reporters' inquiries 
would still be directed to the Information Office, and material 
now released automatically could be kept on file and made avail- 
able as requested. To prevent misunderstandings, the agency 
might still hold news conferences to explain novel cases such as 
those in which the FTC seeks a corrective advertising order or 
applies a new monopoly theory.^"^ 

(v) Harm. — ^ What is the likelihood and scope of injury 
which might result from agency publicity? Publicity concerning 

'®^ See note 142 supra. 

^^^ See pp. 1416-19 supra. 

^^° See p. 1390 supra. The defense bar is highly critical of the FTC's auto- 
matic publicity policy. See .^BA Administrative Law Section, The Twelve ABA 
Recommendations for Improved Procedures for Federal Agencies, 24 Ad. L. Rev. 
389, 410 (1972). 

^®' Opponents of such a reform may make several arguments, but none is 
particularly persuasive. It is true that the present automatic publicity policy per- 
mits the Public Information Office no discretion to decide when to issue a press 
release concerning a complaint, while the selective policy would. But the difference 
is illusory, because under the present policy, the Information Officer decides which 
complaints will receive special publicity such as a news conference. Admittedly, a 
selective publicity policy might give a greater appearance of agency bias merely 
because some complaints were publicized and others were not. But any agency 
publicity gives an appearance of partisanship, and the appearance is heightened 
when the charges publicized are tentative and are changed before an adjudicative 
hearing is held. 


some types of agency activity is likely to be so prejudicial that it 
should almost never issue. For example, where agency adjudica- 
tions are similar to judicial trials, the well-developed rules appli- 
cable to trial publicity by lawyers should apply. ^^^ The EEOC 
practice of "trial by handout" demeans the adjudicative process 
and its participants and may render procedural protections at a 
subsequent hearing irrelevant. As a general rule, agency publicity 
regarding adjudications should be kept to the barest minimum, at 
most announcing the commencement of the proceeding, the in- 
terim decision by the hearing officer, the final agency action, and 
the result of judicial review. Where investigations are regulatory 
or preprosecutorial and look toward subsequent adjudication, the 
usual practice follows the grand jury precedent of keeping such 
proceedings confidential. ^'^^ Obviously, publicity as a sanction has 
no place here; in fact, there seems to be little justification for 
holding such hearings in public. ^^* Informational or legislative- 
type investigations, on the other hand, serve a different purpose. 
They are designed to inform the agency, and sometimes the public, 
as part of the development of agency policy, rules, or legislative 
proposals. They are invariably public, and this practice was spe- 
cifically approved by the Supreme Court in FCC v. Schreiber}^^ 

*^* See ABA Special Comm. on Evaluation of Ethical Standards, Code of 
Professional Responsibility, Canon 7, EC 7-33, DR7-107 (Final Draft 1969). 
See generally ABA Advisory Comm. on Fair Trial-Free Press, .'\B.'\ Project on 
Minimum Standards for Criminal Justice: Fair Trial-Free Press (1966); 
Reardon, The Fair-Trial-Free Press Standards, 54 A. B.A.J. 343 (1968). 

^^^ See, e.g., 16 C.F.R. § 2.8(c) (1973) (FTC investigational hearings normally 
not public); i K. Davis, Administrative Law Treatise § 3.13 (1958). For a 
review of grand jury procedure, see 8 J. Wigmore, Evidence § 2360 (McNaughton 
rev. 1961); Calkins, Grand Jury Secrecy, 63 Mich. L. Rev. 455 (1965). See also 
Fed. R. Crim. P. 6(e). 

^^* See E. Gellhorn, supra note 170, at 117-23. 

'«'*38i U.S. 279 (1965). 

[Plublicity tends to stimulate the flow of information and public preferences 

which may significantly influence administrative and legislative views as to 

the necessity and character of prospective action. 
Id. at 294. Chief Justice Warren's reference to publicity, however, relates to that 
generated by public hearings, not by administrative press release. 

Of grave concern, however, is the occasional tendency of agencies to use such 
proceedings to ventilate charges against individuals or companies without affording 
the accused a reasonable opportunity for rebuttal. Cf. Maslow, Fair Procedure in 
Congressional Investigations : A Proposed Code, 54 Colum. L. Rev. 839, 861-70 
(1954). One answer, of course, would be to allow the charged party an opportunity 
to confront his accusers, to challenge unfavorable evidence, and to present an affirm- 
ative case. In general, this approach defeats the purpose of informational hearings; 
they would simply become adjudications. See Hannah v. Larche, 363 U.S. 420, 
443 (i960); Note, The Distinction Between Informing and Prosecutorial Investi- 
gations: A Functional Justification for "Star Chamber" Proceedings, 72 Yale L.J. 
1227 (1963). Rather, such charges do not deserve to be aired in public. Either 
the hearings should be confidential or such charges ruled out of order. The re- 


Where agency action concerns a serious and continuing prob- 
lem of public health, safety, or economic harm, speed may be 
critical. On the other hand, so is accuracy, since an erroneous 
announcement may be nearly as harmful as the threat of peril 
which motivates the warning. Unless the public "need" for an 
immediate announcement is substantial, the ideal procedure would 
be to postpone agency publicity which is likely to have a signif- 
icant and adverse impact until the named respondent has had an 
opportunity for a hearing. In some cases, consideration of the 
likelihood of harm from the publicity would indicate that it is so 
minimal as to legitimate the use of adverse publicity. Thus, for 
example, criticism from NHTSA has so slight an impact on an 
industry which can easily protect itself that NHTSA should have 
greater leeway to issue adverse publicity.^^'' However, this is not 
to say that NHTSA should rely on more, rather than less, pub- 
licity. Of course, consideration of the potential injury should not 
be Hmited to those singled out in the news announcement. As 
the cranberry episode demonstrates, adverse publicity may have 
many spillover effects which should be considered in an agency's 
decision. ^''^ 

In sum, the four factors of need, alternatives, accuracy and 
effectiveness, and harm should be considered together in determin- 
ing whether authorized adverse publicity should issue. This 
analysis suggests that inflexible publicity policies are unlikely to 
be desirable, unless one can reasonably assume that the importance 
of the various factors does not shift within a category of cases. 
As Professor Davis has rightly suggested, ^^^ the appropriate re- 
sponse to administrative abuse is not to discard discretion, but 
rather to structure, check, and confine it through agency rules 
and regulations. Where adverse publicity supplements or is a 
substitute for other agency sanctions,^"" and therefore constitutes 
a sanction, the agency should be careful to satisfy itself that 
these basic standards are met. 

(b) The Content of Adverse Publicity. — Once a decision is 
made that some publicity should be forthcoming, the question of 

formed rules of several congressional committees, developed after the stresses of 
the McCarthy era, provide a useful guide. See, e.g., Joint Comm. on Congres- 
sional Operations, Rules Adopted by the Committees of Congress, gad Cong., 
ist Sess. 158, 171 (Comm. Print 1971) (defamatory or accusatory statements to be 
received in executive session). 

'^^ Correspondingly, in such cases the publicity is less likely to serve any un- 
authorized purposes. On the other hand, the victim's ability to withstand the in- 
jury — its deep pocket — would not seem to be a principled basis for deciding 
whether adverse publicity should issue, unless wealth redistribution is a regulatory 

'^'See pp. 1408-10 & note 134 supra. 

'^^K. Davis, Discretionary Justice: A Preliminary Inquiry chs. 3-5 (1969). 

'®® See, e.g., section I. D. supra. 


its content arises. Agency rules regarding the content of press 
announcements should vary depending upon the complexity of the 
agency action, the sophistication of the likely audience — of both 
the immediate reporters as well as the ultimate readers or viewers 
— and the possibility of harm. Regulations should indicate such 
guidelines as whether a pleading should be reprinted or summa- 
rized and whether and from whom further information should be 
made available. Agency rules should also indicate the proper 
tenor and format of publicity announcements.^"^ For all agency 
publicity, factual, nonpejorative descriptions of agency action 
should be the inflexible rule.-"^ In addition, all agencies should 
follow the FTC practice of prominently featuring in every 
appropriate release the tentative nature or limited basis of the 
charge. ""- 

2. Publicity Procedures. — Unless implemented with sensi- 
tivity, these publicity policies provide only limited protection. 
Beyond familiar exhortations that administrative regulation can- 
not rise above the quality of an agency's personnel, a few pro- 
cedural guides may be appropriate. First, publicity generally 
should issue from only one agency source. The media should not 
be encouraged to interview staff members in charge of litigation 
or investigations; if background information is available, the 
SEC's approach of limiting disclosure to facts not for quotation 
or attribution -"■' seems appropriate. For example, any reform of 
FTC publicity policy should take account of the Commission's 
present practice of permitting the staff to meet informally with 
the press to discuss nonconfidential matters.-''^ Insofar as such 
discussions relate to charges against individual respondents, the 
practice seems objectionable. In fact, most of the legitimate re- 
spondent grievances uncovered by this study arose out of ad hoc 
staff responses to press inquiries. Such informal interchanges 
assure neither accuracy nor uniformity, and the FTC should 
amend its Operating Manual to require that staff members refer 

^°°5ee, e.g., FTC Publicity Guidebook 3-13. 

^°' The SEC, for example, has surmounted the problem of overstatement which 
once plagued its press releases. See Gillipan, Will & Co. v. SEC, 267 F.2d 461, 
468-69 (2d Cir.), cert, denied, 361 U.S. 896 (1959); Silver King Mines, Inc. v. 
Cohen, 261 F. Supp. 666 (D. Utah 1966). In order to minimize misstatement, SEC 
announcements append the official Commission document to the release, which only 
summarizes the SEC's action in the barest manner. See SEC, Manual of Ad- 
ministrative Regulations § 161.04 (1966). 

^°^ See note 35 supra. 

^°^ Interviews with Ronald F. Hunt, Secretarj' to the SEC, in Washington, 
D.C., .Aug. 2 & is, 1972. See also SEC, Manual of Administrative Regulations 
§ 161.06(B)(2) (1966). 

204 p-pQ^ Operating Manual ch. 10.4 (1971). 


all press inquiries to the Information Office. To the extent that 
it could be made enforceable,^"^ such a requirement would enhance 
the effectiveness of the more fundamental changes already sug- 

Second, agency publicity procedures should be reviewed peri- 
odically. When policies are new, all problems cannot be antici- 
pated. And established policies may not be working or may have 
become unnecessarily rigid. For example, administrative effi- 
ciency and fairness might be served by the FTC's adoption of 
a one-step complaint procedure ^^^ which allows respondents to 
negotiate a settlement within tight time limits, before charges are 
filed and publicized."*'^ The Commission's public relations fiasco 
in the Zerex antifreeze case would not have occurred if a one-step 
procedure had been used. 

Third, where feasible, an agency might consider creating an 
internal appeal procedure whereby the private party complaining 
of adverse agency publicity could seek redress. This suggestion 
is tendered cautiously, because agency processes are not enhanced 
merely by burdening them with another layer of administrative 

Finally, intermediate approaches such as those suggested by 
the Consumer Product Safety Act -^^ are also possible. That is, 
each agency should consider the feasibility of providing that 
where practicable, parties to be subjected to proposed adverse 
publicity be given advance notice and an opportunity to comment 
to the agency upon the press announcement before its release. 
When an adverse disclosure is inaccurate or misleading, the 
agency should provide specific procedures for issuing a retraction, 

^°' In fact, of course, the Commission has a history of being unable to control 
itself. For example, in the celebrated Sherman Adams-Goldfine affair of the iQSo's, 
the then chairman of the FTC, Edward F. Howrey, disclosed confidential infor- 
mation in clear violation of several statutes. See House Comm. on Interstate 
AND Foreign Commerce, Independent Regulatory Commissions, H.R. Rep. No. 
2711, 8sth Cong., 2d Sess. 46-50 (1959). See also 15 U.S.C. §§ 46(f), 50 (1970); 
18 U.S.C. § 190S (1970); 44 U.S.C. § 3508 (1970). 

^°® C/. 17 C.F.R. § 202.5 (1972) (SEC enforcement activities). This suggestion 
would require an abandonment of the Commission's Part II complaint procedure. 
An informal procedure advising respondent of the nature of the complaint, assuring 
the reasonable accuracy of the facts asserted therein, and allowing an opportunity 
for brief settlement negotiations would still seem advisable in many instances; it 
should not be accompanied by a Commission press release, however. 

^*" Settlement negotiations might still be permitted after the complaint was 
filed, at the discretion of the administrative law judge, but they should not be 
automatically available as a delaying device. This recommendation would rewrite 
16 C.F.R. § 2,34(d) (1973), which generally denies any opportunity for settlement 
after a complaint is issued. 

2°^ Consumer Product Safety Act §§ 5(a)(1), 6(b)(1), 15 U.S.C.A. §§ 
205s(a)(i), 2056(b)(1) (Supp. 1973)- 


if requested, in the same manner (if feasible) in which the orig- 
inal publicity was disseminated. 

D. External Controls 

I. Judicial Review. — Courts have generally avoided review- 
ing adverse agency publicity. At first, they concluded that they 
could not even determine whether agency publicity was author- 
ized.'"^ But later, courts overcame this difficulty on the general 
theory that administrative agencies may not lawfully exercise 
power unless it is delegated to them. Thus, when agency press 
releases have been challenged, the first legal issue is invariably a 
determination of the agency's authority to issue them. If not au- 
thorized, adverse agency publicity may be enjoined upon a show- 
ing of injury not otherwise compensable at law.^**' 

However, in the few legal tests to date, courts have generous- 
ly construed statutory authority to issue press releases, even if 
their effect is admittedly punitive. As long as the publicity can 
be justified as being within the agency's express or implied au- 
thority to inform or warn the public, the press release is al- 
lowed. ^^^ Yet little attention has been focused on agency autho- 
rity to use publicity wholly or in part as a sanction. The case 
authority is not dispositive even of basic questions. Either the 
arguments against agency authority have proven too much, or the 
cases have involved complex scientific questions which cloud the 
issue of authority.^^^ The ratio decidendi of the decisions tend to 
be quite narrow, and the courts have rightly been hesitant to deny 
agencies necessary discretion. If the issue of an agency's use of 
publicity to add to its statutory enforcement powers were clearly 

2"^ See Hearst Radio, Inc. v. FCC, 167 F.2d 225 (D.C. Cir. 1948); Kukatush 
Mining Corp. v. SEC, 198 F. Supp. 508 (D.D.C. 1961), aff'd, 309 F.2d 647 (DC 
Cir. 1962). 

-'°5ee, e.g.. Bristol-Myers Co. v. FTC, 424 F.2d 935, 940 n.21 (D.C. Cir. 1970) ; 
B.C. Morton Int'l Corp. v. FDIC, 305 692 (ist Cir. 1962) ; Silver King Mines, 
Inc. V. Cohen, 261 F. Supp. 666 (D. Utah 1966). 

Without such review, administrative action which impairs private rights might 
result in an improper constitutional invasion or action beyond an agency's statu- 
tory authority. 

^" 5ee, e.g., FTC v, Cinderella Career & Finishing Schools, Inc., 404 F.2d 1308 
(D.C. Cir. 1968), discussed at note 30 supra. See generally Barr v. Matteo, 360 
U.S. 564, S7S (1959). The cases are collected and capably discussed in Lemov, 
Administrative Agency News Releases: Public Information Versus Private Injury, 
37 Geo. W.ash. L. Rev. 63 (1968); Note, supra note 157, at 1518-25. The only 
significant case law development in the intervening 5 years is the comment in 
Bristol-Myers ''regret[ting the lower court's] broad dictum suggesting that an 
agency could never be enjoined from publicizing its activities." Bristol-Myers Co. 
V. FTC, 424 F.2d 935, 940 n.2i (D.C. Cir. 1970). 

^^^ See, e.g., cases cited note 210 supra. 


defined, however, a court could more readily review the question 
of its authorization. ^^^ Furthermore, Httle or no consideration has 
been given to whether agencies could accomplish their information 
and warning functions with less harmful alternatives,^^* particu- 
larly since the cases often deal with severe and imminent perils 
to public health. ^^^ Yet where the case for publicity is not com- 
pelling and the authority to use publicity coercively is doubtful, 
it would seem appropriate for a court to scrutinize the adminis- 
trative authority closely. 

Practical reasons also explain the judicial reluctance to re- 
view use of adverse publicity. Effective review is almost impos- 
sible when no record exists, standards are vague, and administra- 
tive claims of efficiency are difficult to evaluate. Nor are courts 
prone to oversee administrative action when they are powerless 
to prevent the injury or to remedy the harm. Injunctions seeking 
to prevent repetition of an adverse release may close the door, 
but only after the primary injury has accrued. The doctrines of 

^'^It could be argued that the Administrative Procedure Act requires that an 
agency have specific authority to issue publicity. Section 9(a) of the APA pro- 
vides that "A sanction may not be imposed . . . except within jurisdiction dele- 
gated to the agency and as authorized by law." 5 U.S.C. § S58(b) (1970). To 
sustain this argument, publicity must be viewed as a "sanction." Several points 
support this position. First, adverse publicity has all the attributes of a sanction. 
Second, "sanction," as defined in § 2(f) of the APA, covers such diverse acts as 
the "imposition of [3] penalty" and the "destruction ... of property." 5 U.S.C. § 
551(10) (C)-(D) (1970). Even if it were argued that the issuance of an adverse 
press release is not itself the destruction of property or the direct imposition by the 
state of a penalty, the effect on the victim is indistinguishable from a direct penalty. 
This distinction between direct and indirect imposition of a penalty dissuaded one 
state court, however, from invalidating a statute conferring authority on a state 
agency to publish names of employees violating minimum wage requirements. 
Vissering Mercantile Co. v. Annunzio, i 111. 2d 108, 121, 115 N.E.2d 306, 313 
(1953). Third, the original uncodified — and governing — language of § 2(f) speaks 
of the "imposition oj any form of penalty." 60 Stat. 238 (1946) (emphasis added). 
See also Legislative History, Administrative Procedure Act, S. Doc. No. 248, 
79th Cong., 2d Sess. 274 (1946), quoted at note 221 infra. 

However, establishing that an adverse press release is a sanction within the 
meaning of the APA does not mean that the release is therefore ultra vires. It 
must still be shown that the press release "sanction" was not "authorized by law" 
as required by § 9(a). It is on this issue — of explicit or implicit "authority" — 
that most decisions concentrate. See, e.g., FTC v. Cinderella Career & Finishing 
Schools, Inc., 404 F.2d 1308 (D.C. Cir. 1968). And none have suggested that the 
.\PA. requirement that administrative actions be "authorized by law" imposes a 
standard of legislative authority. On the other hand, it does not appear that the 
"authority" argument has ever been asserted by relying upon the APA in this 

^^* See FTC v. Cinderella Career & Finishing Schools, Inc., 404 F.2d 1308, 
1316-17 (D.C. Cir. 1968) (Robinson, J., concurring) (majority's rationale ignored 
the issue of alternatives). 

^^^ See, e.g., p. 1413 supra (FD.\ Bon Vivant episode). 


sovereign immunity and absolute privilege usually insulate agen- 
cies and their officers from liability. ^^^ And in any event, the mere 
bringing of a lawsuit may create the very injury the plaintiff seeks 
to avoid or have compensated. ^^^ 

These arguments are not, however, dispositive. Judicial re- 
view, provided by statute, of adverse agency publicity need not 
be tied to final agency action.^^® That is, the standards for issuing 
adverse publicity, the procedures for assuring its accuracy, and 
the refusal to retract or explain ambiguous or erroneous publicity 
can be reviewed independently of any review of the agency's sub- 
stantive action. Moreover, review of these procedural issues is 
thus not delayed until they are mooted. And the devices of a 
"John Doe" complaint, sealed pleadings, in camera hearings, etc., 
familiar in judicial proceedings for sensitive matters,-^^ would 
avoid unnecessary injury to parties adversely affected. 

2. Statutory Reform. — Three specific statutory reforms can 
be suggested: specific legislative authorization and direction for 
adverse agency publicity; express statutory authority for limited 
judicial review of agency publicity practices and procedures; and 
amendment of the Federal Tort Claims Act to allow compensa- 
tory relief for victims of unfair and harmful agency publicity.^^" 

^^^ See p. 1437 & note 233 infra. 

^^'' This is not to say that judicial review is not desirable. One concern is that 
adverse publicity is chosen as the course of least resistance whereby an agency can 
avoid the rigors and costs of judicial inspection because it has no guideUnes. See 
H.R. Rep. No. 585, gzd Cong., ist Sess. (1971) (FDA recall procedure). See also 
pp. 1420-21 & note 161 supra. 

^*® There is not at present a statute providing for direct judicial review of 
agency practices. See L. Jaffx, Judicial Control of Administrative Action 
164-65 (1965) ; Cramton, Nonstatutory Review of Federal Administrative Action: 
The Need for Statutory Reform of Sovereign Immunity, Subject Matter Jurisdic- 
tion, and Parties Defendant, 68 Mich. L. Rev. 387, 443-46 (1970). See also p. 1436 

''^^ See, e.g., Doe v. Bolton, 410 U.S. 179, 184 & n.6 (1973) (abortion decision) ; 
Roe v. Wade, 410 U.S. 113, 120-21 nn.4, 5 (1973) (abortion decision) ; Annot., 62 
A.L.R.2d 509 (1958). See generally Mellinkoff, Who is "John Doe"?, 12 U.C.L.A.L. 
Rev. 79 (1964). 

'^^'^ Theoretically one might also urge Congress to exercise direct control over 
abusive adverse agency publicity. Such control standing alone would not be effec- 
tive, however, since Congress' power over agency programs and appropriations is 
a crude legislative weapon unsuited for supervising specific agency practices. Ex- 
pansive judicial interpretations of agency authority and the pressure of other legis- 
lative responsibilities have contributed to the decline of congressional direction for 
administrative agencies. See generally H. Friendly, The Federal Administra- 
tive Agencies: The Need for Better Definition and Standards (1962). .And the 
usual technique of congressional oversight — the exposure of administrative mis- 
deeds through public investigations and reports — seems inappropriate in this con- 
text and unlikely to be effective. If external controls are to be imposed, then, they 
must come primarily from the courts, with an assist from the legislature in opening 
additional avenues for judicial scrutiny and protection. 


Each recommendation builds on experience in analogous fields 
where similar issues of administrative control were raised. How- 
ever, no one proposal is dependent on adoption of another. 

(a) Authority for Adverse Agency Publicity. — There is solid 
precedent for specific legislative authorization and direction of 
adverse agency publicity. In enacting the Freedom of Informa- 
tion Act, Congress announced a policy favoring full disclosure of 
government information.--^ And in creating the Consumer Prod- 
uct Safety Commission, the legislature specifically required the 
agency to "collect, investigate, analyze, and disseminate injury 
data, and information, relating to the causes and prevention of 
death, injury, and illness associated with consumer products." --- 
But before publishing damaging data the Commission must, if it 
is practicable, notify the manufacturer of the damaging informa- 
tion, allow it a reasonable opportunity to supply the Commission 
with further information, and take reasonable steps to insure its 
information is accurate and its publicity fair.--'' Moreover, if the 
adverse disclosure is either inaccurate or misleading, the Commis- 
sion must, "in a manner similar to that in which such disclosure 
was made, publish a retraction of such inaccurate or misleading 
information." --■* 

Legislative amendment of each agency's enabling act would 
probably be too cumbersome a method for providing this direc- 
tion. Since the principles enunciated in the Consumer Product 
Safety Act seemingly apply to all agency publicity, the Adminis- 
trative Procedure Act (APA) should be amended to (i) authorize 
agencies to disseminate adverse information when they determine 
that reasonable need for disclosure exists and after its accuracy is 
assured and (2) to require a retraction if the disclosure is ma- 

^^' 5 U.S.C. § 552 (1970). See also S. Doc. No. 248, 79th Cong., 2d Sess. 274 
(1946) (legislative history of APA discussing § 9(a), which limits sanctions imposed 
by agencies) : 

In short, agencies may not impose sanctions which have not been specifi- 
cally or generally provided for them to impose. . . . 

One troublesome subject in this field is that of publicity, which may in 
no case be utilized directly or indirectly as a penalty or punishment save as 
so authorized. Legitimate publicity extends to the issuance of authorized 
documents, such as notices or decisions; but, apart from actual or final 
adjudication after all proceedings have been had, no publicity should reflect 
adversely upon any person, organization, product, or commodity of any kind 
in any manner otherwise than as required to carry on authorized agency 
functions and necessary in the administration thereof. It will be the duty 
of agencies not to permit informational releases to be utilized as penalties 
or to the injury of parties. 

^-^ Consumer Product Safety Act § 4(a)(1), 15 U.S.C. A. § 20S4(a)(i) (Supp. 
1973) (emphasis added). See also National Commission on Product Safety Act 
§ 3(e), Pub. L. No. 90-146, 81 Stat. 466 (1966). 

2" Consumer Product Safety Act § s(b)(i), 15 U.S.C.A. § 205s(b)(i) (Supp. 

22" Id. 


terially erroneous, substantially misleading, or clearly excessive. 
(b) Statutory Authorization for Direct Judicial Review. — 
Expansion of opportunities for judicial review of agency publicity 
by granting direct but limited statutory review of publicity prac- 
tices and procedures is consistent with increasing judicial over- 
sight of informal administrative action.--'^ But it can be ques- 
tioned whether there is a significant function for judicial review 
to perform — in contrast to the grant of injunctive relief or other 
extraordinary remedies already available under principles of non- 
statutory review — which warrants its authorization. A brief 
analysis ■ suggests an affirmative answer. First, injunctive and 
other relief is extremely limited. Most victims of adverse pub- 
licity cannot show the likelihood that they will be victimized 
again by similar agency publicity. As a consequence, adverse 
agency publicity generally is not enjoinable. Second, there are 
many situations where review would be desirable. EPA announce- 
ments ""''' or EEOC releases '-' are examples of agency publicity 
w^hich might be made more responsible by occasional judicial re- 
view. Third, review could easily be accomplished without inter- 
fering with the agency action which triggers the release. Judicial 
review of adverse publicity, independent of other administrative 
action, would perform its usual function in administrative law 
of assuring that agency procedures meet minimum standards and 
comply with the agency's own rules as well as legislative direc- 
tions. For example, judicial examination of FDA recall proce- 
dures,--^ which have never been tested, is sorely needed. Such 
review need not interrupt any particular recall, although it might 
result in general changes of FDA processes.--" At first, it might 
seem difficult to frame a judicial order directed only toward the 
publicity, especially where the injury has already occurred. But 
such orders could require an agency retraction or explanation of 
prior publicity or, like agency cease-and-desist orders,-''" direct an 
agency to modify its publicity procedures to meet named criteria. 
This suggested form of relief would supplement but not supplant 
injunctive or other relief already available.-" The APA should 

^^^ See, e.g., Citizens to Preserve Overton Park, Inc. v. Voipe, 401 U.S. 402 
(1971), noted in 85 Harv. L. Rev. 315 (1971). 

^^^ See pp. 1401-03 supra. 

^^'' See pp. 1398-401 supra. 

^*® 5ee pp. 1407-16 supra. 

'^^^ The standard that should be applied on review is beyond the scope of this 
Article. Several possible standards appear to be available. The five criteria sug- 
gested for agencies, see pp. 1440-41 infra, might be applied by a review court. Or 
the courts could apply the standard of cost-benefit analysis used when injunctive 
relief is sought. See Bristol-Myers Co. v. FTC, 424 F.2d 935 (D.C. Cir. 1970). 

23" C/. Silver King Mines, Inc. v. Cohen, 261 F. Supp. 666 (D. Utah 1966). 

^^' But see Lemov, supra note 211, at 78 (Congress "should prohibit injunctions 
preventing the release of [warning] information"). 


be amended accordingly to permit this limited, direct judicial re- 
view of adverse agency publicity practices and procedures. 

(c) Expansion of the Federal Tort Claims Act. — By adopt- 
ing the Federal Tort Claims Act ^"''^ (FTCA), Congress recog- 
nized that persons injured through government actions should, as 
a matter of policy, be entitled to the same protections and redress 
available to victims of private torts. The anomalous doctrine of 
sovereign immunity "" was waived for "negligent or wrongful" 
acts.-'*^ Injury from adverse agency press releases was explicitly 
excluded from government liability since immunity was not 
waived for "[a]ny claim arising out of . . . libel, slander, mis- 
representation, [or] deceit." -■^•'' Congress apparently sought to 
move slowly in opening the doors to liability. It did not want to 
burden the courts with potentially fraudulent actions or to expose 
the public treasury to exaggerated claims, especially where the 
advantage might lie with the claimant. 

The experience under the FTCA for over a quarter of a cen- 
tury now establishes that courts can discourage needless litigation 
and that they do limit awards to reasonable amounts.-'"' More- 
over, when adverse agency publicity causes severe damage likely 
to be costly, as it did to the entire cranberry industry, political 
pressures may result in legislative compensation."^^ Amendment 
of the FTCA to allow routine recovery for less powerful victims 
of administrative publicity thus seems desirable as a matter of 
simple equity and unlikely either to overburden the courts or to 
overwhelm the treasury.-^** 

Of course, this does not mean that care should not be used in 
drafting the amendment. For example, because of constitutional 
Hmitations,-"'"* there is no counterpart in private tort law for this 

^•''^28 U.S.C. §§ 1291, 1346, 1402, 1504, 2II0, 2401-02, 2411-12, 2671-78, 2680 

^^^ See Recommendation No. g: Statutory Reform of the Sovereign Immunity 
Doctrine, i Recommendations & Rep. of the Ad. Conference of the U.S. 190 
(1970) ; Byse, Proposed Reforms in Federal "Nonstatutory" Judicial Review: 
Sovereign Immunity, Indispensable Parties, Mandamus, 75 Harv. L. Rev. 1479, 
1484-93, 1508-13, 1523-31 (1962); Cramton, supra note 218; Davis, Sovereign 
Immunity Must Go, 22 Ad. L. Rev. 383 (1970). 

"^28 U.S.C. § 1346 (1970). 

235 /d. § 2680(h). 

"^^^ See I L. Javson, Handling Federal Tort Claims ch. 10 (1970). 

'^^'' See W. Gelliiorn & C. Byse, Administrative Law: Cases and Comments 
332-33 (5th ed. 1970); I L. Jayson, supra note 236, at § 21; W. Gellhorn & 
Lauer, Federal Liability for Personal and Property Damage, 29 N.Y.U. L. Rev. 
1325, 1328-42 (1954). See also p. 1409 & note 118 supra. 

23® The inadequacy of private legislative relief is well documented. See gen- 
erally W. Gellhorn & C. Byse, siipra note 237, at 331-34; W. Gellhorn & Lauer, 
C ongressiotial Settlement of Tort Claims Against the United States, 55 Colum. L. 
Rev. I (1955). 

239 See, e.g.. New York Times Co. v. Sullivan, 376 U.S. 254 (1964). 


action, at least if a showing of malice is not required. Amend- 
ment of the FTCA, as urged here, would hold the Government 
liable for damages in situations where a private individual would 
not be liable. This result is somewhat contrary to the original 
purpose of the Act,"'*" but not inconsistent with its overall aim;^'** 
and the constitutional protection afforded private citizens against 
defamation actions by government officials does not seem appli- 
cable in reverse."^- Moreover, the procedures which have been 
developed for FTCA actions -^^ seem admirably suited to con- 
trolling private actions concerning abusive or excessive govern- 
ment publicity. 

If the FTCA is to be amended, as recommended here, several 
issues need resolution. The primary reason for allowing mone- 
tary recovery is not vindication but compensation. This suggests 
that relief might be extended only to persons or groups that have 
suffered substantial injury from erroneous, misleading, or patently 
excessive publicity directed at them. Perhaps a showing of min- 
imum injury, such as the requirement that at least $10,000 be in 
controversy to invoke federal diversity jurisdiction,"^* might be 
applied to prevent frivolous or petty suits, although no such limi- 
tation otherwise exists in the FTCA. Alternatively, if exorbitant 
judgments are a significant concern, a maximum recovery might 
be imposed on these actions. But neither limitation seems particu- 
larly desirable. The costs of litigation are likely to eliminate 
minor suits, and it seems anomalous at best to amend the Act to 
counter injustice yet limit the relief available in the most serious 
cases. Moreover, an appropriate limitation against insubstantial 
claims could be accomplished by placing substantive limits on 
the type of claim recognized; liability should be imposed only 
where adverse agency publicity indentifies the claimant and is 

^*'°The FTC.\ limits the liability of the United States "to tort claims, in the 
same manner and to the same extent as a private individual under like circum- 
stances . . . ." 28 U.S.C. § 2674 (1970). 

^'^^ See, e.g., S. Rep. No. ioii, 7Qth Cong., 2d Sess. 25 (1946) (efficient use of 
congressional time) ; W. Gellhorn & Schenck, Tort Actions Against the Federal 
Government, 47 Colum. L. Rev. 722, 726-30 (1947) (adequate compensation for 
injured persons). See also Gottlieb, The Federal Tort Claims Act — A Statutory 
Interpretation, 35 Geo. L.J. i (1946). 

^"'^ Cf. Kalven, // This Be Asymmetry, Make the Most of It!, The Center 
Magazine, May/June 1973, at 36. 

^*^ See I L. Jayson, supra note 236, at chs. 15-17 (compromise and settlement; 
practice and procedure; administrative claims). 

^""28 U.S.C. § 1332 (1970). The $10,000 requirement also purportedly applies 
to federal question cases, 28 U.S.C. § 1331 (1970), but particular statutes grant 
jurisdiction without regard to the amount in controversy in most areas that would 
otherwise fall under the general federal question statute. 


materially erroneous, substantially misleading, or clearly exces- 

The usual rules applicable to tort claims under the FTCA 
seem appropriate for such suits, with perhaps a few modifications. 
The burden of establishing both liability and damages should 
rest with the claimant. However, unlike the general rule in libel 
suits, damages should not be presumed. Liability should be con- 
ditioned on the claimant's establishing that the adverse publicity 
was (a) directed at it, (b) materially erroneous, substantially 
misleading, or clearly excessive, and (c) not remedied by the 
final administrative action. Regarding the underlying agency 
action, it should be obvious that liability is not established — nor 
even a prima facie case made out — by the fact that the adminis- 
trative decision ultimately favored the claimant. Dismissal or 
abandonment of administrative action frequently occurs for 
legitimate reasons, and that decision should not be influenced by 
the possibility of tort liability. On the other hand, a final adminis- 
trative determination which effectively supports the adverse pub- 
licity should preclude any tort claim; amendment of the FTCA 
should not open an avenue for collateral attack on the adminis- 
trative action. Moreover, agency investigatory, adjudicatory, or 
rulemaking proceedings should continue to be absolutely privi- 
leged; the amendment here relates only to adverse agency pub- 
licity calling attention to agency action. -^'^ Finally, the claimant 
should bear the burden of establishing that it was the adverse 
agency publicity which caused his injury, if the question arises. 

The decision to permit access to agency records, as encouraged 
by the Freedom of Information Act, would not be affected by 
amendment of the FTCA to allow recovery for adverse publicity. 
Such claims would be limited to injuries inflicted by active pub- 
licity; the tort action would not review discretionary decisions to 
open government files. On the other hand, relief should not be so 
constricted that only written news releases or false charges would 
be the basis of recovery."*^' If the amendment were so limited 
the revision of the Act would permit only illusory relief. 

This recommendation is consistent with persistent scholarly 
condemnation of the general FTCA exception denying recovery 
to victims of most deliberate torts. -^^ If careless agency action 
is the basis for recovery, it is irrational that the same misguided 

^"^ Of course, the immunity should also extend to accurate and not excessive 
descriptions of such agency proceedings. 

^^^ But see Lemov, supra note 211, at 81. 

^"'^ See, e.g., W. Gellhorn & Lauer, supra note 237, at 1341: "No persuasive 
reason has ever been advanced for their having been excluded from the reach of the 
Tort Claims Act." See also 3 K. Davis, Administrative Law Tteatise § 25.08 
(1958, Supp. 1970); L. Jafte, supra note 218, at 256. 


action is not the basis for relief merely because it was deliberate. 
The clumsiness and injustice of the current system seems patent. 
As the 1959 cranberry episode indicates, it is not unusual for vic- 
tims of government error to seek and obtain relief by "private 
legislation." And where the appropriate level of compensation 
is unclear, Congress frequently waives sovereign immunity and 
assigns that determination to an agency or the Court of Claims, 
which in effect relies upon FTCA principles in granting relief.^^'' 
This double-layered procedure is time-consuming and costly, and 
unfair to those without political influence. For example, in a seem- 
ingly simple case where the FDA had admittedly made a costly 
error in asserting that a spinach grower's crop was contaminated 
by a nonexistent pesticide, it took plaintiffs almost seven years 
and over $20,000 in legal fees and expenses to present their claim 
to Congress and the courts. ^^^ An amendment of the FTCA might 
measurably reduce the current cost of compensating victims of 
agency mistakes, as well as promote justice. No better support 
can be secured for any recommendation. 

III. Conclusion 

In studying the adverse publicity of administrative agencies, 
one is constantly reminded that little attention has focused on its 
use and almost no effective controls have been developed to stop 
its abuse. Not only have agencies failed to structure and confine 
their uses of publicity, but they also have not even considered 
when adverse publicity is appropriate or desirable. Consequently, 
the first contribution of this Article is to articulate the criteria by 
which agency use of adverse publicity should be measured. An 
agency should issue publicity which may have a significant ad- 
verse impact on a private party only when: 

(i) the agency is authorized explicitly by statute or 
implicitly by the regulatory scheme to make public an- 

(2) the publicity is necessary to serve a legitimate 
agency function such as warning or informing the public; 

(3) there is no less harmful alternative that would be 
effective ; 

(4) the information or statements made in the pub- 
licity release are likely to be accurate and correctly under- 
stood; and 

(5) the benefit from the publicity to the regulatory 

^^^ See, e.g., Mizokami v. United States, 414 F.2d 1375 (Ct. CI. 1969). 
^"^ Id. The claimants finally recovered these costs as well as their damages of 
about $280,000. Id. at 1383. 


program and the public is substantial or at least worth the 

risk of harm likely to result. 
This standard specifically does not adopt the frequent suggestion 
that the regulatory benefit merely outweigh the harm ^^° on a 
cost-benefit analysis. This is not to suggest that public health 
and safety cannot be stated in quantitative terms. It is to sug- 
gest, however, that the regularity and fairness of agency actions 
have a value independent of the costs and benefits visible in a 
particular decision. 

This Article has not attempted to address the question of 
whether the distribution of information and warnings should be 
left entirely to the private sector,-''^ or the extent to which media 
practices would result in the same injuries even if agency pub- 
licity policies were reformed. Instead, because adverse publicity 
may serve a legitimate function and its use will in any event 
continue and probably increase, the major focus has been on its 
control, both internal and external. The most significant pos- 
sibilities for reform are within the agencies themselves; further 
extension of judicial review and control is primarily justified by 
its corrective impact on agency practices. 

Adverse agency publicity is a powerful and often unruly non- 
legal sanction. When misused it can destroy reputations and busi- 
nesses, impair administrative performance, and abuse public con- 
fidence. When carefully controlled it can be the touchstone of 
accurate, efficient, and fair administrative regulation. The con- 
trols recommended in this Article seek to channel agency publicity 
toward these goals. 

'^^° See, e.g., FTC v. Cinderella Career & Finishing Schools, Inc., 404 F.2d 1308, 
1316 (D.C. Cir. 1968). 
^^^ See note 157 supra. 



Lynda S. Zengerle* 

I. Introduction 

In 1965 the Immigration and Nationality Act [Act], 8 U.S.C. 
§1101 et seq. (1970), was amended to achieve the dual purpose of 
reunifying families whose members had been separated because 
of previously enforced national quota limitations, and establish- 
ing new controls to protect the American labor market from an 
influx of both skilled and unskilled foreign labor. The Act pro- 
vides geographic quotas which establish the maximum number 
of aliens who may emigrate each year from Western or Eastern 
Hemisphere countries ^ and sets forth an elaborate system of 
preference priorities among which are allocated the total number 
of immigrant visas permitted to be issued annually to aliens from 
the Eastern Hemisphere countries. No similar system for visa 
quota allocation exists for Western Hemisphere aliens. 

The Act also sets out classes of aliens who are automatically 
excluded from entry into the United States. 8 U.S.C. §1182 (a) 
(1970). The fourteenth exclusionary category, 8 U.S.C. §1182 (a) 
(14) (1970) [subsection 14 exclusion], excludes aliens seeking 
to enter the United States to find work unless they obtain a labor 
certification from the Department of Labor [Department]. 

Except as otherwise provided in this chapter, the following classes of 
aliens shall be ineligible to receive visas and shall be excluded from 
admission into the United States: 

* * * * * 

Aliens seeking to enter the United States for the purpose of performing 
skilled or unskilled labor, unless the Secretary of Labor has determined 
and certified to the Secretary of State and to the Attorney General that 
(A) there are not sufficient workers in the United States who are able, 
willing, qualified, and available at the time of application for a visa and 

* staff Attorney and Consultant to the Committee on Informal Action. 

^ The Immigration and Naturalization Service [Service] has designated the countries 
of North and South America as the independent foreign countries of the Western 
Hemisphere. All countries other than those of North and South America have been 
designated the independent foreign countries of the Eastern Hemisphere. 



admission to the United States and at the place to which the alien is 
destined to perform such skilled or unskilled labor and (B) the employ- 
ment of such aliens will not adversely affect the wages and working con- 
ditions of the workers in the United States similarly employed. The 
exclusion of aliens under this paragraph shall apply to special immigrants 
defined in section 1101(a) (27) (A) of this title (other than the parents, 
spouses, or children of United States citizens or of aliens lawfully ad- 
mitted to the United States for permanent residence) , to preference 
immigrant aliens described in sections 1153(a)(3) and 1153(a)(6) of 
this title, and to non-preference immigrant aliens described in section 
1153(a) (8) of this title. [Emphasis added]. 

Prior to the 1965 amendments, alien workers were free to 
enter the United States unless the Secretary of Labor [Secretary] 
acted to prevent their entry.- The 1965 amendments attempted 
to implement the aforementioned policy of protecting the Ameri- 
can labor market from an influx of skilled and unskilled foreign 
workers by requiring affirmative action on the part of the Secre- 
tary to determine the non-availability of American workers and 
the absence of an imposition of adverse affect on wages and work- 
ing conditions prior to certifying aliens seeking employment. 
This study is concerned only with those aliens who seek both 
employment in the United States and permanent residence here 
(i.e. immigrants) rather than temporary admittance, for the 
predominant reason that it is the uniformity of the labor certifica- 
tion process undergone by these applicants that permits critical 
analysis of that process. However, it is useful to discuss briefly 
the other categories of aliens entering the United States in order 
to illustrate their omission from this study, either because they 
do not require such certification or because the certification they 
do require results from procedures which are numerous in their 
variety and substantially different in kind. 

A. The Scope of the Study 

During the fiscal year [FY] 1972, approximately 5.6 million 
aliens were admitted into the United States; of this total, ap- 

* Prior to December 1, 1965, the specific authority and responsibility of the Depart- 
ment of Labor were set forth in Section 212(a) (14) of the Immigration Act of 1952, 
which then read : 

Except as otherwise provided in this Act, the following classes of aliens shall be 
ineligible to receive visas and chall be excluded from adnnission into the United 
States : 

* • * 

Aliens seeking to enter the United States for the purpose of performing skilled 
or unskilled labor, if the Secretary of Labor has determined and certified to the 
Secretary of State and to the Attorney General that (A) sufficient workers in 
the United States who are able, willing, and qualified are available at the time 
(of application for a visa and for admission to the United States) and place (to 
which alien is destined) to perform such skilled or unskilled labor, or (B) the 
employment of such aliens will adversely affect the wages and working conditions 
of the workers in the United States similarly employed . . . [Emphasis added]. 


proximately 400,000 came as immigrants.^ The remainder entered 
this country for a temporary period only (i.e., as non-immi- 
grants). Generally speaking, an alien seeking permanent resi- 
dence may be admitted to the United States not only on the basis 
of (1) a labor certification, by which process approximately 
30,000 of the 400,000 immigrants entering the United States in 
FY 1972 gained entrance,^ but also by means other than such 
certification, as through such qualification as (2) a familial re- 
lationship with someone already permanently residing here, or 
(3) refugee status, 8 U.S.C. §1153 (a) (1970). And, generally, an 
alien seeking admittance to the United States for a temporary 
stay may enter as (1) a temporary worker, (2) a tourist, (3) a 
student, (4) a transient en route to another country, (5) a repre- 
sentative of: a foreign government, a foreign company, or the 
foreign media, or by other means detailed in the Act. 8 U.S.C. 
§1101(a)(15) (1970). The Immigration and Naturalization 
Service within the Department of Justice [Service], and the De- 
partment of State, have primary responsibility for the admission 
of both immigrants and non-immigrants and control over the 
duration of their stay. In addition, the Department of Labor plays 
a primary role in deciding which of those aliens seeking entry to 
work will ultimately be admitted. However, not all aliens who 
enter the United States to work obtain labor certifications; and, 
as earlier stated, not all aliens who obtain labor certifications fall 
within the scope of this study. At the outset, immigrants entering 
on grounds other than labor certification (e.g., in FY 1972, 
370,000 out of 400,000) are by definition excluded from the 
study. All non-immigrants, including those who have obtained 
labor certification, are also excluded, and they fall into diverse 

Of the approximately 5.2 million aliens who entered the United 
States during FY 1972 as non-immigrants, approximately 3.5 
million aliens entered as visitors for pleasure, i.e., tourists.^ 
Service authorities have noted that it is not uncommon for such 
tourists to take a job, each thereby becoming "a lawbreaker by 
violating the terms of his admission to the United States as a 
tourist." ^ These aliens are obviously not subject to the scrutiny 
of the Department since they have not sought a labor certification, 

' 1972 Immigration and Naturalization Service Annual Report 26. [Hereinafter 

* Unpublished data supplied by Mr. John Sheeran, Chief, Division of Immigration and 
Rehabilitation Certification, U.S. Department of Labor. [Hereinafter Unpublished De- 
partment Data]. 

s Report, supra note 3. 

'^Illegal Latin 'Turistas' Live in Fear of Detection, Washington Post, Jan. 21, 1973, 
}E, at 1, col. 1 [Hereinafter Illegal Latin Turistas]. 


There are also a number of non-immigrants who work legally 
in the United States who do not seek labor certifications, or if 
they do, not for permanent residence. According to Service data, 
approximately 40,000 aliens entered the United States as tempo- 
rary workers in FY 1972.' Of these, approximately 10,000 were 
issued labor certifications for temporary non-agricultural em- 
ployment ^ and approximately 15,000 were issued labor certifica- 
tions for temporary agricultural employment.^ Service regulation 
8 C.F.R. §214.2(h)(3) (1972) stipulates that only those aliens 
who fall within the definition of 8 U.S.C. §1101 (a) (15) (H) (ii) 
(1970)^*' need a labor certification to work temporarily in the 
United States. The remaining approximately 15,000 aliens who 
entered the United States to work temporarily did so without a 
labor certification, under the authority of the numerous excep- 
tions within the Act and Service regulations. 

The labor certifications, obtained by non-immigrants, issued 
for a temporary period of up to one year, are not included within 
the scope of this study for several reasons. First, the Department 
employs different procedures for processing certification applica- 
tions for temporary agricultural and non-agricultural employ- 
ment; additionally, "mini-programs" have been established for 
specific occupations in both employment fields, such as sheep- 
herders, logrollers, and entertainers and little enlightenment is 
to be gained concerning procedural deficiencies in the alien certifi- 
cation program as a whole by digression into these individualistic 
procedures. Second, temporary certifications are issued only when 
a specific job exists for the alien to fill. Only the prospective 
employer of the alien, not the alien himself, can thus apply for a 
temporary certification ; approximately ninety percent of all such 
applications are approved,'^ and few complaints have ever been 
lodged against the procedures employed. Finally, while the Serv- 
ice is bound by the Department's issuance or denial of a valid 
permanent certification, by inter-departmental agreement the 

■' Report, supra note 3. 

* Unpublished Department Data, supra note 4. 

« Interview with Mr. Jack Donnachie, Deputy Director, Rural Manpower Service, 
U.S. Department of Labor, in Washington, D.C. March 29, 1972. It should be noted that 
these certifications do not appear in the statistics on temporary certification compiled 
by the Department, see note 4 supra. 

'0 8 U.S.C. 51101(a) (15) (H) (ii) (1970) states: 

(15) the term "immigrant" means every alien except an alien who is within one 
of the following classes of nonimmigrant aliens — 

(H) an alien having a residence in a foreign country which he has no intention 
of abandoning . . . (ii) who is coming temporarily to the United States to perform 
temporary services or labor, if unemployed persons capable of performing such 
service or labor cannot be found in this country. 
^ Unpublished Department Data, supra note 4. 


Service considers the Department's ruling on a temporary cer- 
tification as an advisory opinion which it can overrule. 

There is one other substantial group of non-immigrants work- 
ing in this country who enter the country periodically to work. 
These aliens have in prior years already obtained labor certifica- 
tions as permanent residents, and thus are embraced by the terms 
of the study. The returning resident alien (also referred to as a 
"commuter" or a "green card" alien) is an "immigrant lawfully 
admitted for permanent residence who is returning from a 
temporary residence abroad," 8 U.S.C. §1101 (a) (27) (B) (1970), 
although for statistical purposes the Service treats him as a non- 
immigrant. The regulations amplify this definition by describing 
commuters as persons "returning to an unrelinquished lawful 
permanent residence in the United States after a temporary visit 
abroad." 8 C.F.R. 211.1(b)(1) (1972). In FY 1972, approxi- 
mately 700,000 commuters entered the United States.^^ ^he daihj 
commuter does not have to resubmit to Department certification 
procedures each time he enters the country. The U.S. Court of 
Appeals for the District of Columbia Circuit recently decided, 
however, that the seasonal commuter is not entitled to the bene- 
fits of the classification of a returning resident alien; he must 
therefore seek a labor certification under 8 U.S.C. §1101 (a) (15) 
(H) (ii) (1970) each time he enters the country to work.^^ Since 
this decision was handed down so recently, the Service has not 
yet had the opportunity to challenge or comply with it. The re- 
quired additional labor certifications obtained by seasonal com- 
muters are not, therefore, reflected in the statistics on the number 
of certifications issued annually and are not included in this 
report. The three major groups of non-immigrants discussed 
above — tourists, temporary workers, and commuters — account for 
4.6 of the 5.2 million non-immigrants entering this country in FY 
1972. The remaining non-immigrants, such as transit aliens and 
dependents of aliens within these major groups, do not enter the 
United States to work ; should they obtain employment, they, like 
the tourists mentioned earlier, do so illegally, without seeking 
labor certification, or fall within an exemption to the subsection 14 

Although small by comparison to the total number of aliens 
annually entering the United States, there is, nevertheless, a 
sizable group of aliens for whom the acquisition of a labor cer- 

12 Report, supra note 3. 

i^Bustos V. Mitchell, No. 72-1179 (D.C. Cir.. April 16, 1973). Slip, op. at 8. For more 
information on the returning resident alien, see Greene, N on-Resident Alien Labor) 40 
Geo. Wash. L.Rev. 440 (1972). 


tification is a necessity prior to gaining admission for permanent 
residence in the United States. In FY 1972, approximately 70,000 
aliens applied for labor certifications, and the number of applica- 
tions were much higher in previous years. ^^ Of the 70,000, ap- 
proximately 60,000 applications were for permanent certifica- 
tions,''^ and as noted earlier, 30,000 of those were granted. See 
note 4 supra. It is the procedures governing the approval or 
denial of the latter applications with which we are concerned. 

B. The Reason for the Study 

After the Act was amended in 1965, the Department established 
procedures to screen all those aliens whose permanent visa ap- 
plications must contain a labor certification. These procedures 
were created to make it possible to decide which aliens would pose 
a threat to the American labor market according to the criteria 
of availability and adverse affect set forth in the subsection 14 
exclusion, and thus which aliens should be denied labor certifica- 
tion. The Department regulations which established these pro- 
cedures,'" amended as recently as February, 1971,'" and the 
manner in which they are implemented, have been the subject of 
numerous complaints by the bar representing aliens seeking to 
enter the United States in order to work. Members of the Asso- 
ciation of Immigration and Nationality Lawyers [Association] 
claim that when an alien applies for a labor certification, his right 
to administrative fairness '** is repeatedly violated both while his 
application is being considered initially and while his applica- 
tion is being administratively reviewed if an appeal is taken from 
a denial of certification : '^ 

Initial decisions are made in secret upon undisclosed evidence, upon 
unrevealed statistics, upon prevailing wages computed in camera and 
required experience adjudicated ex parte. Administrative appeals are 

"According to Unpublished Department Data, supra note 4, 113,915 aliens applied for 
labor certifications in Fiscal Year 1971; 152,768 in 1970; 157,096 in 1969; and 191,927 in 

>5 Unpublished Department Data, supra note 4. The 10,000 remaining applications 
were for temporary non -agricultural employment. As noted earlier, see note 9 supra, 
the temporary agricultural certification statistics are not included in data compiled by 
the Department. 

'8 29 C.F.R. §60.1 et seq. (1972). 

1-36 Fed. Reg. 2462 (Feb. 4, 1971). 

'» It is within the powers and duties of the Administrative Conference of the United 
States to study and make recommendations concerning the "efficiency, adequacy, and 
fairness of administrative procedures used by administrative agencies in carrying out 
administrative programs." 5 U.S.C. §574 (1970). 

" Speech by Mr. Jack Wasserman, past President of the Association of Immigration 
and Nationality Lawyers at the 1972 Conference of the Association, in New Orleans, 
Louisiana, May 26, 1972. [Hereinafter Wasserman Speech.] 


generally decided in similar fashion and without courtesy or fairness or 
oral argument or any advance notice of the real issues to be decided 
upon such appeal. 

The importance of a labor certification should not be under- 
estimated. For those who cannot claim a specific relationship to 
a permanent United States resident or who do not qualify for 
permanent residence under other sections of the Act, the certifica- 
tion is a condition precedent to ultimate approval of a visa peti- 
tion for permanent residence or an application for adjustment to 
permanent resident status by the Service.^" For those who are in 
this country as tourists but violate the conditions of their entry 
and take employment, a labor certification is the difference be- 
tween working openly and working furtively, often at menial 
jobs for inadequate pay, in constant fear of deportation.^^ Pos- 
session of a valid labor certification gives the immigrant alien 
freedom eventually to change his residence, his occupation, or his 
employment at will. 29 C.F.R. §60.5 (f). See Part 11(D) infra. 

The Department's regulatory procedures for labor certification, 
when joined with those aspects of the Service's statutory pro- 
cedures governing visa petitions which require labor certification, 
establish a complex route that must be followed by the alien seek- 
ing to emigrate to the United States for the purpose of obtaining 
permanent employment. In order to determine whether labor 
certification procedures fail to meet ordinary standards of ad- 
ministrative fairness and uniform application, whether the De- 
partment's policies on disclosure satisfy the requirements of the 
Freedom of Information Act,-- and whether these determinations 
will result in the deficiencies charged thus calling for corrective 
recommendations, we must first examine the operation of the 
relevant provisions of the Act and the Department regulations 
underlying the labor certification program. 

II. Certification 

A. Statutory Provisions which Require Labor Certification for 

Visa Approval 

Within the Act, seven categories of preference priorities plus 

-" Many assume that the alien applying for a visa number resides outside the United 
States. There are, however, a number of such aliens legally within the United States 
and these aliens are prima facie eligible for an immigrant visa. Once it is established 
that a visa number is available under one of the preferences, the alien can apply for 
adjustment of status. 8 U.S.C. §1255 (1970). For an in depth discussion of adjustment 
of status procedures, see Sofaer, The Change-of -Status Adjudication: A Case Study 
of the Informal Agency Process, 1 J.Leg. Studies 349 (1972). 

^ See, e.g., Illegal Latin Touristas, supra note 6, at 7. 

^5 U.S.C. §551 et seq. (1970). 


a non-preference category have been established to determine the 
allocation of immigrant visas within the annual statutory ceil- 
ing ; -^ each of the seven preferences as well as the non-preference 
has a quota of immigrant visas expressed in a fixed percentage 
of that ceiling. Four of the preferences set forth prescribed rela- 
tionships to citizens or permanent residents of the United States 
and one concerns refugees; aliens seeking to enter the United 
States under the terms set forth in any of these five preferences 
need not obtain a labor certification. ^^ Pursuant to the require- 
ments of 8 U.S.C. §§1153 and 1101(a) (27) (1970), a labor cer- 
tification V7nst be obtained by the following four classes of aliens: 

1) Third preference immigrants, who are described as 
"qualified members of the professions, or who because of their 
exceptional ability in the sciences or the arts will substantially 
benefit prospectively the national economy, cultural interests, 
or welfare of the United States." 8 U.S.C. §1153 (a) (3) 
(1970). The third preference immigrant is customarily re- 
ferred to as a "PSA" (profession, science, or art) . 

2) Sixth preference immigrants, who are described as 
"qualified immigrants who are capable of performing specified 
skilled or unskilled labor, not of a temporary or seasonal na- 
ture, for which a shortage of employable and willing persons 
exists in the United States." 8 U.S.C. §1153 (a) (6) (1970). 
The sixth preference immigrant is customarily referred to as 
a job-offer applicant since he must have a specific job offer; 
and it is the prospective employer who seeks the certification 
for the applicant alien. 

3) Non-preference immigrants, who are described as "other 
qualified immigrants strictly in the chronological order in 
which they qualify." 8 U.S.C. §1153 (a) (8) (1970). 

4) Special immigrants, who are described as immigrants 
who were "born in any independent foreign country of the 
Western Hemisphere or in the Canal Zone and the spouse and 
children of any such immigrant, if accompanying, or follow- 
ing to join him." 8 U.S.C. §1101 (a) (27) (A) (1970). [Here- 
inafter Western Hemisphere.] 

The exemptions from these requirements to obtain a labor cer- 
tification are detailed in 8 C.F.R. §212(8) (b) (1972) and 22 
C.F.R. §42.91 (a) (14) (ii) (1972). The most widely used exemp- 
tion is that which provides that the spouse or child accompanying 

^ The ceiling applies only to the seven categories of preference immigrants, and 
non-preference immigrants, and only to natives of Eastern Hemisphere countries and 
dependent areas of those countries. 8 U.S.C. §1151 (a) (1970). 

»*8 U.S.C. §§1153(a) (1), (2), (4), (5), (7) (1970). 


the alien who has gained a certification need not obtain a cer- 
tification. The other exemptions apply to specified groups of peo- 
ple and generally require assurances that the entering alien will 
not seek employment while in the United States. 

B. The Agency Structure 

When the Act was amended in 1965, the Secretary delegated 
his responsibility for the certification program to the Assistant 
Secretary of Labor for Manpower.-^ In an attempt to provide 
more discriminating attention to the domestic labor situation in 
different geographical areas across the United States, the De- 
partment began to decentralize its operation of the labor certifica- 
tion program in 1967. Decentralization was accomplished by the 
further delegation of authority to the Regional Manpower Ad- 
ministrator in each of the Department's ten existing regional 
offices (plus the Administrator for the District of Columbia), 
and the establishment within the Manpower Administration of a 
National Office located in Washington. 

While the National Office retains the responsibility to provide 
general guidance to the regional offices, each regional office re- 
mains relatively autonomous, having primary responsibility for 
the conduct of the labor program in its geographical area. The 
National Office dictates the broad outlines for the conduct of the 
certification program within each of the regions and remains 
available to handle unusual cases that regional officers are unable 
to resolve. 

In addition to a Regional Manpower Administrator at its head, 
each regional office is composed in part of a certifying officer who 
approves or denies applications for certification, 29 C.F.R. 
§60.4 (a) (1972), and a reviewing oflficer who is responsible for re- 
quests for a review of a denial of certification {i.e., hears ap- 
peals). 29 C.F.R. §60.4 (b) (1972). A representative survey of 
three regional offices revealed that, to some extent, each such 
office follows different procedures in its handling of certification 
applications. The following information, unless otherwise speci- 
fied, is derived from that survey.-^ 

25 For references to this delegation of authority, see 29 C.F.R. §§60.4 (a) and (e) 

^ During the week of April 9, the author interviewed certifying and reviewing 
officers in the New York and Atlanta regional offices and in the Manpower Adminis- 
tration Office for the District of Columbia. Complete access to all staff members and 
all files within these offices was provided and full advantage of the opportunity to 
become acquainted with the operation of the certification program in different parts 
of the country was taken. All references to a survey of regional offices refers to this 
field experience. 


In all regional offices, the certifying officer has numerous duties 
relating to aspects of the Manpower Administration program 
other than immigration, and therefore devotes only a portion of 
his time, generally about twenty-five percent, to the certification 
program. Each certifying officer has a staff of several profes- 
sionals who have a civil service rating ranging from GS-9 to 
GS-12. It is these professionals who conduct the research and 
analysis necessary to determine whether a certification applica- 
tion should be approved or denied. Some certifying officers take 
an active part in the determination to approve or deny a certifica- 
tion, while others simply approve the determinations arrived at 
by staff members without themselves reviewing the file. Some 
reviewing officers have a supporting staff of professionals while 
others do not. Some reviewing officers rely on the information in 
the file as it arrives from the certifying officer while others con- 
duct their own independent research. It is clear that while the 
broad outlines of the structure of the certification program are 
similar across the country, numerous dissimilarities exist in the 
implementation of the program within the regions, resulting in 
different treatment of aliens seeking certification depending upon 
the geographic location of their intended employment and in- 
tended residence. 

C. Regulations Governing Labor Certification 

Certification application procedures will vary according to five 
factors: (1) The applicant alien's native country (Eastern or 
Western Hemisphere) ; (2) the applicant's present location 
(abroad or in the United States) ; (3) the nature of the job 
sought by the applicant (professional, skilled or unskilled) ; (4) 
the preference under which the Eastern Hemisphere applicant 
petitions for a visa (third, sixth, or non-preference) ; and (5) 
the nature of the application (visa application or adjustment of 
status application, both of which will be accompanied by a cer- 
tification application). 

Department regulations contain two categories of employment 
wherein certification is granted or denied on a predetermined 
basis. Groups I and II of Schedule A list a few professions and 
occupations in the medical and health services area, and group 
III of Schedule A includes certain professions and occupations in 
the field of religion. There is presently a manpower shortage 
within all of these professions in the United States. An alien 
whose application for labor certification provides proof of quali- 


fication for a job listed in Schedule A is considered by the Service 
or the consular officer who receives the application to have been 
issued a labor certification, without Department intervention, 
(i.e., precertified). 29 C.F.R. §60.2(a)(l) (1972). Schedule B 
presently lists 48 unskilled and low skilled jobs for which there is 
a surplus of American candidates; an alien seeking to enter the 
United States to perform one of these jobs will have his certifica- 
tion automatically denied by a regional office, 29 C.F.R. §60.2 (a) 
(2) (1972). 

1. Schedule A 

Since Schedule A applications do not involve Department ac- 
tion, their processing is the most straight forward for purposes 
of this paper. A brief explanation of that type of application pro- 
vides a good beginning point for discussing the various procedural 
routes taken by the applications. Schedule A applications are filed 
with either a consular officer of the State Department abroad or 
with a Service officer in the United States. 29 C.F.R. §60.3 (a) 
(1972). All adjustment of status applications by definition come 
from within the United States, see note 20 supra; their support- 
ing certification applications thus are filed with a Service officer. 
All Eastern Hemisphere aliens located in the United States seek- 
ing issuance of statutory third, sixth, or non-preference immi- 
grant visas who claim to be qualified in a Schedule A occupation 
or profession must also file their certification applications with a 
Service officer. Such applicants located abroad must file with a 
consular officer, as must all Western Hemisphere aliens, regard- 
less of their location, who claim to be qualified in a Schedule A 
occupation or profession. Normally certification applications for 
Schedule A occupations will not be referred to the Department, 
but the Service or Consulate may occasionally request an opinion 
or determination as to whether such an applicant qualifies for 
Schedule A processing in the occupation listed by the applicant. 
Once the Service or Consular officer concludes that the alien's 
qualifications meet the appropriate standards, he will indicate 
the Schedule A occupation for which the alien qualifies on the 
application for the certification, thereby completing the precerti- 
fication process. 29 C.F.R. §60.3 (a) (1972). 

2. PSA— Not Schedule A 

Applications for certifications of aliens in the professions, 
sciences, or arts, whose occupations are not included on Schedule A, 


[PSA — Not Schedule A] are submitted to the Service or con- 
sular officer as attachments to the visa petition for statutory third 
preference classification. These applications will not be made by 
Western Hemisphere aliens, whose applications are handled out- 
side the preference system. Accordingly only Eastern Hemisphere 
applicants are involved, the location of the applicant determining 
the office of filing. Upon receipt, the Service or consular officer 
determines the specific occupation for which certification is sought 
and whether the alien is qualified for that occupation. Upon de- 
termining proper qualification, the officer then forwards the ap- 
plication for the certification to the appropriate Manpower Ad- 
ministration regional officer for certification analysis. The certify- 
ing officer is bound by the determination of a Service officer as to 
whether the alien qualifies for the occupation cited on the ap- 
plication and whether that occupation falls within the definition 
of "PSA" ; such determinations by a consular officer are, however, 
reviewable by the certifying officer. 29 C.F.R. §60.3 (b) (1972). 
The application of an alien who claims to be qualified as a "PSA" 
but nevertheless seeks classification under the statutory sixth 
preference (skilled or unskilled), or as a statutory non-preference 
applicant for adjustment of status, is similarly processed. 

3. Job Offer 

Applications of aliens whose occupations are not included in 
Schedule A or who are not "PSA's" must follow slightly different 
procedural routes. These aliens must have a job offer from an 
American employer as part of their application for certification. 
Job-offer applications for certification are filed by the prospec- 
tive employer, rather than the applicant alien, with the local 
office or the central state office of the State Employment Service 
serving the area of prospective employment. 29 C.F.R. §60.3 (c) 
(1972). That office gathers information with respect to the sub- 
section 14 exclusion criteria of availability and adverse affect. 
The files of the local office as well as other available source ma- 
terial are searched for possible American job applicants who 
meet the requirements for the job offer. Additionally, the em- 
ployer's wage offer is reviewed in light of the duties of the job 
for which the offer has been made. If American applicants are 
found to be available through the local office files, the certification 
application will be denied by the regional office. If the wage offer 
appears to be below the standard area wage for that occupation, 
the State Employment Office contacts the employer, and he is 


offered an opportunity to amend his wage offer to meet the pre- 
vailing wage rate. If he fails to meet the prevailing wage rate, 
such failure constitutes an adverse affect such as to require 
denial of a certification application by the regional office. 

Once these preliminary steps have been accomplished, the local 
office forwards the application, together with the information 
developed — whether favorable to the alien's application or not — to 
the State office of the State Employment Service, for trans- 
mittal to the appropriate regional office of the Department's 
Manpower Administration. The information transmitted should 
be precise in setting forth details on availability, adverse affect, 
and the source of this information. 29 C.F.R. §60.3 (c) (1972). 
The certifying officer (or his staff) reviews the application and 
makes a determination using the information furnished by the 
State Employment Service together with any other information 
independently developed by the staff. 

All applications for certification where a job offer is required 
are returned to the employer upon denial, accompanied by a 
transmittal form stating the reasons for denial. If the alien whose 
job-offer application is approved is a Western Hemisphere alien 
or will be applying abroad for the issuance of a non-preference 
immigrant visa, the approval is sent to the appropriate Consulate 
and notification of that transmittal is furnished to the employer. 
If the alien whose job-offer application is approved is an Eastern 
Hemisphere alien who will have a sixth-preference visa petition 
filed on his behalf or will be applying for adjustment of status 
from within the United States, the certification approval is re- 
turned to the prospective employer who will forward it to the 
Service for use with a sixth-preference petition or will deliver it 
to the alien to be filed in support of his application for adjust- 
ment of status. 

D. The Certification Decision 

The Department's certification decision plays a decisive role 
in determining whether the alien is accorded a priority date for 
allocation of a visa number, and what that date will be. Third 
preference aliens (who do not require a job offer), and applicants 
for adjustment of status who are found eligible for a labor cer- 
tification where no job offer is required, receive a priority date as 
of the date the visa petition on their behalf, or their application 
for adjustment of status, is filed with the Service or Consulate. 
Both sixth and non-preference aliens who require a job offer get 


a priority date according to the date their prospective employer 
files an application with the State Employment Service, if the 
certification is issued. The Western Hemisphere alien's priority 
date is determined by the date that either the Consul or the State 
Employment Service receives his application, depending on 
whether that type of alien seeks a visa as a "PSA" or job-offer 

If the alien's application for labor certification is denied by the 
certifying ofl^cer, the alien has the right to one administrative 
appeal at the reviewing officer level ; any further appeal must be 
taken to the courts. See Part III (A) infr^a. If, after exhausting 
all his remedies, the alien's denial is upheld, he must file a new 
application if he continues to desire to come to the United States 
to work. If the new application results in the issuance of a cer- 
tification, the alien will be assigned a priority date for visa issu- 
ance on the basis of the new application, thereby extending the 
period of time the alien must wait before he can finally be ad- 
mitted to the United States. 

The length of time, intended occupation, and geographic area 
for which a labor certification is valid also reflect a certifica- 
tion's importance, as well as its limitations. Once issued, the 
certification is valid indefinitely except that aliens working as 
household domestics or as teachers are certified for only one year 
at a time and require annual revalidation. 29 C.F.R. §60.5 (a) 
(1972). The automatic labor certifications issued pursuant to 
Schedule A are limited to the intended occupation set forth on the 
alien's occupation form. While the Department may impose 
geographic restrictions for Schedule A occupations, it has not 
done so to date. 29 C.F.R. §60.5 (e) (i) (1972). A labor certifica- 
tion issued to a "PSA — not Schedule A" applicant is limited to 
the intended occupation and geographic area of intended resi- 
dence designated in the alien's application. 29 C.F.R. §60.5 (e) (2) 
(1972). A labor certification issued to a job-offer applicant is also 
limited to the job and geographic location upon which the alien 
based his certification application. 29 C.F.R. §60.5 (e) (3) (1972). 
As noted above, however, possession of a valid permanent labor 
certification in fact gives the alien freedom to change his resi- 
dence, his employment, or his occupation at will even before ful- 
filling the conditions of his certification. Neither the Service nor 
the Department is equipped to monitor what the alien does once 
he arrives in this country with a valid certification. Thus, though 
the terms of the certification may be restricted on its face, 


in reality, the alien has complete mobility within the American 
labor market. 

Review of an adverse decision on a certification application is 
the final step in the Department's certification decision-making. 
The request for review must be made in writing and addressed 
to the Regional Manpower Administrator who oversees the 
certifying officer who denied certification, and must be made 
(perfected) within 90 days of the denial or the denial is not 
reviewable. It must clearly identify the alien, and prospective 
employer, if applicable, for whom certification has been denied; 
must state specific reasons for requesting a review; and must 
include all documents which accompanied the denial of certifica- 
tion. 29 C.F.R. §60.4 (b) (1972). 

The regulatory language states that "[rjequests for review of 
a denial of certification . . . may be made . . .," 29 C.F.R. §60.4 (b) 
(1972), but nowhere particularizes who shall request review. 
In actual practice, the *TSA — not Schedule A" alien naturally 
presses his own appeal ; the alien for whom application for cer- 
tification was based on a job offer can press his own appeal or 
have his prospective employer appeal the certification denial. ^'^ 
The review is made by the Administrator or his designated rep- 
resentative (the reviewing officer), 29 C.F.R. §60.4 (c) (1972), 
and is often based not only on information in the record but also 
on information developed independently by the reviewing officer.^^ 
Neither the certifying officer who denied certification nor any 
member of his staff may participate in any phase of the review. 

III. Deficiencies in Certification Procedures 

If it were relatively easy to obtain a labor certification today, 
and if the vast majority of those applying for certification were 
successful, perhaps the complaints of those who cite violations 
of both the requirement of fairness and statutory mandates 
within the Department's certification procedures would not sound 
so harshly. Under the pre-1965 policy only twelve to fifteen per- 
cent of all those who sought to enter the United States to work 

"Interview with Department of Labor officials (Kenneth Bell, Special Assistant to 
the Associate Manpower Administrator: Robert Pfeffer, Counsel for Manpower; Eliza- 
beth McAghan, Assistant Division Chief, Division of Immigration and Rehabilitation 
Certification), in Washington, D.C., Sept. 7, 1972. [Hereinafter Department Interview]. 
It has been established that the alien's prospective employer has standing to seek 
judicial review of the denial of the alien's request for labor certification. See, e.g., 
Farino v. Secretary of Labor, No. 71-C-2495 (N.D. 111., Sept. 26, 1972). 

^ Department of Labor Guidelines, established pursuant to revised procedures found 
at 29 C.F.R. §60.1 et seq. (1972). [Hereinafter GuideUnes]. 


were barred ; today the disapproval rate is 46.3 percent of all 
those seeking labor certifications.-^ The determination to approve 
or deny certification applications reflects the state of the Ameri- 
can economy, the nature of the American labor market, and the 
level of American unemployment. Within recent years the per- 
centage rate of certifications granted has dropped rapidly: 

The impact of the transition from a tight labor market to widespread 
labor surpluses on the numbers and occupations of alien workers approved 
for permanent immigrant certification was very sharp. The number of 
such certificates issued dropped by over 40 percent between FY 1970 and 
FY 1971— from 97,093 to 57,517.'" 

Although it is clear that American economic factors dictate in 
part both the number of certification applications received and 
the number of certifications ultimately approved, the fact that a 
large number of people seek certification each year, and that in- 
creasingly more people are unsuccessful in their quest for one of 
the ingredients vital to their legal entry into this country to 
work, further support the need for a close look at the legality of 
these procedures. 

A. Revieiv of Certification Denial 
1. Notice of Denial 

When the certifying officer decides to deny certification, he 
indicates the date of denial on the appropriate form and returns 
the form, as discussed in Part 11 (C) above, either to the Service 
or Consulate (if the alien is a "PSA — not Schedule A" applicant) 
or to the employer (if the alien is a job-offer applicant) .^^ In no 
case does the alien receive notice directly from the Department 
that certification has been denied.^- The failure of the Depart- 
ment to notify the alien of its action in his case does not appear 
to be supportable on grounds of either policy or administrative 
burden, and the ramifications of that failure render this a prob- 
lem that should be rectified. 

As indicated earlier, the alien or his prospective employer, see 
note 27 swpra and accompanying text, has 90 days from the date 

2» Interview with Mr. John Sheeran, Chief, Division of Immigration and Rehabilita- 
tion Certification, U.S. Department of Labor, in Washington, D.C., Oct. 6, 1972. 

3" Address by Robert J. Brown, Acting Associate Manpower Administrator for U.S. 
Employment Service, Department of Labor, 1972 Conference of the Association of 
Immigration and Nationality Lawyers, in New Orleans, May 26, 1972. [Hereinafter 
Brown Address.] 

^ Department Interview, supra note 27. 


of certification denial in which to appeal the certifying officer's 
determination. If the alien does not appeal for a review of that 
determination within 90 days, he must file a new application for 
certification, resulting in the assignment of a new priority date 
no earlier than the filing date of the new application, if the cer- 
tification is issued. With respect to the "PSA — not Schedule A" 
alien, as much as 30 of those 90 days are often lost between the 
Department's notice of denial to the Service and the Service's 
ultimate notification to the alien or his employer that a visa peti- 
tion or application for adjustment of status has been denied be- 
cause of lack of a required certification. A similar type of time 
loss is visited upon the job-offer alien who wishes to press his 
own appeal rather than depend on his prospective employer. 
Although the Department has noted that the employer is essential 
in the pursuit of a certification for a job-offer alien,^^ it would 
not appear to impose an untoward burden on the Department to 
dispatch notice of denial of certification to the alien at the same 
time such notice is sent to the employer. The alien should be 
given every opportunity to assist himself in his efforts to achieve 

Although officials at the Department contend, despite an 
absence of such language in the regulations, 29 C.F.R. §60.4 (b) 
(1972), that the 90-day limit for appeals was intended to include 
possible delays in notice to the alien, ^•"' when balanced against the 
minimal increase in the administrative burden for the agencies 
involved, it becomes apparent that the Department in coordina- 
tion with the Service should adopt an appropriate combination 
of the following alternatives. 

If the regulation guaranteeing the alien 90 days in which to 
request review is to be taken at face value, it should be applied 
in the following manner. With respect to notice of denial to 
"PSA — not Schedule A" applicants, the Department should send 
its notice directly to the alien as well as to the Service or con- 
sular officer. If the Department prefers to continue its practice 
of sending notice to the Service or consular officer alone, it may 
do so. In either event, the 90-day period should begin to run the 
day notice is sent to the alien, whether by the Department or by 
the Service. With respect to the job-offer applicants, the Depart- 

^ It should be noted that if the prospective employer withdraws his job offer, the 
alien can no longer press his apphcation for certification as a job-offer applicant. 
Administrative fairness dictates, however, that the alien should be kept apprised of 
the status of his application and should be provided the opportunity to further his 
own case in any way he can. 

3s Department Interview, supra note 27. 


ment should send its notice directly to the alien as well as to the 
prospective employer, with the 90-day period commencing the day 
notice is sent. See note 34 supra and accompanying text. 

If, however, the administrative delays presently encountered 
were meant to be absorbed in the 90-day period as the Depart- 
ment suggests, then the amendment to the regulation dealing with 
the amount of time the alien has to seek review should reflect an 
appropriately shortened time period, to incorporate only mailing 
delays, commencing upon the date of mailing. These alternatives 
are devised to insure both that the clock will not be running 
against the alien who may not otherwise know that further action 
is necessary on his application for entry into the United States 
and also that he will have only a specified amount of time in which 
to act in order to maintain his position of priority on the visa 
quota list. 

2. Notice of Right to Appeal 

When the Department sends out the aforementioned notice to 
the prospective employer that the alien's application for certifi- 
cation in a job-offer case has been denied, that notice contains no 
information about the alien's right to appeal the denial, nor is 
there any statutory or regulatory requirement for such notice.^" 
Until recently the Service also omitted any information about the 
90-day right to appeal on its notice of denial to the "PSA — not 
Schedule A" alien. However, after one alien filed an appeal after 
the 90 days had elapsed and proved that his tardiness was directly 
related to lack of notice about the time limit on his right to ap- 
peal, the Service added ■^' the following statement to its denial of 
an alien's visa petition : ^^ 

[R]eview of the Department of Labor's denial of the certification may 
be requested within 90 days of the date of the attached copy of that 
Department's notice of denial. Such review may be obtained by submitting 
a written request setting' forth the grounds on which the request is based, 
to the Department of Labor office which denied the certification, along 
with Forms MA7-50A and the documents attached thereto. 

As recommended above in Part III (A)(1), the Department 
should send notice of denial directly to the alien as well as to the 
prospective employer; such notice should incorporate the state- 
ment used by the Service to provide the alien with notice of his 

=" Some of the regions now include notice of appeal in a denial of certification but 
the practice is neither widespread nor uniform. See note 26 supra. 

"^ Interview with Robert Lindsey, Deputy Assistant Commissioner, Adjudications, 
Immigration and Naturalization Service, in Washington, DC, Sept. 1, 1972. 

38 Immigration and Naturalization Form 1-521 (Feb. 1, 1972). 


right to appeal, and reflect the correct date on which the time to 
file the appeal begins to run. As with the earlier recommenda- 
tions, the inclusion of this statement will facilitate the alien's 
pursuit of appeal and insure treatment of the alien comporting 
with the requirements of administrative fairness. 

3. Protective Appeals 

Aliens or prospective employers who appeal from a certification 
denial may encounter difficulty in meeting all the requirements 
necessary to perfect their appeal, see Part 11(D) supra, within 
the required 90 days. As discussed above, the alien rarely has the 
benefit of a full 90 days because some of his appeal time has 
elapsed before he even receives notice of denial. Adoption of the 
recommendations made above should eliminate this aspect of the 
alien's diflficulties in pursuing a review of the certifying officer's 
denial. But even with the full period considered appropriate 
available to him, the appellant may be unable to marshal all the 
necessary information. 

At the October 7, 1972 liaison meeting,"^" Association members 
requested that regional offices accept, where circumstances war- 
rant, protective appeals, i.e., incomplete appeals filed within the 
90-day limit, with additional time beyond that limit to submit 
material necessary for the perfection of the appeal.^" Officials at 
the National Office have expressed a willingness to instruct the 
regional ofl^ices to be "reasonable" in allowing the perfection of 
an appeal through the submission of additional evidence after 
the expiration of 90 days, but the instruction remains only in 
advisory terms. ^' Formalization of the protective appeal pro- 
cedure by regulation amendment should take place, thereby 
allowing the alien, for whom verified circumstances have rendered 
it impossible to gather all evidence prior to the ninetieth day, to 
submit additional evidence up until some reasonable time before 
the reviewing officer's final determination. Such an amendment 
would insure a full review for the alien and provide the reviewing 
officer with a complete record for making his decision. The 

» Liaison meetings between officials of the Departments of State, Justice, and Labor 
and members of the Association of Immigration and Nationality Lawyers are held at 
the national level and in some regions at irregular intervals during the year. The 
purpose of these meetings is to permit an exchange of comments about the operation 
of immigration programs as it relates to each of the three Government agencies 

*" Association of Immigration and Nationality Lawyers Liaison Meeting with the 
Department of Labor, in Washington, DC, Oct. 7, 1972, see note 39 supra. [Hereinafter 
Oct. 7 Meeting.] 


amendment would, of course, be limited in use to those who can 
prove their inability, due to circumstances beyond their control, 
to perfect their appeal within 90 days. 

4. The Record Beloiv 

Under the provisions of the subsection 14 exclusion, the Secre- 
tary (i.e., the certifying officer) must determine that no Ameri- 
can workers are "able, willing, qualified, and available" for the 
job sought by the applicant alien, and that the wages and work- 
ing conditions of American workers will not be adversely affected 
by the employment of that alien, before granting a labor certifica- 
tion. Availability and adverse affect are the only two criteria 
which the Secretary may use. In connection with the use of these 
criteria, it has resulted that often the certifying officer's de- 
termination is based on vague and incomplete information ; the 
same problem often exists when the reviewing officer makes in- 
dependent findings to support his determination. It is in this 
setting that several of the significant judicial decisions relating 
to labor certification have arisen. 

In Farino v. Secretary of Labor, '^'^ plaintiffs were two employers 
who each alleged a need for a specialized employee who could not 
be found in the Chicago area. They sought review of the de- 
fendant Secretary's affirmance of the regional office's refusal to 
certify employment of non-resident aliens pursuant to the sub- 
section 14 exclusion. In both cases, the reviewing officer affirmed 
denial of certification on the certifying officer's ground of availa- 
bility of American workers and, in one case, on the additional 
ground independently developed by the reviewing officer that the 
wage offered by the prospective employer would adversely affect 
American workers since it was below the wage prevailing in the 
area. The court found that the latter "finding was not made by 
the certifying officer but was superimposed by the reviewing 
officer, from what data no one can tell." *^ With regard to the 
record upon which the reviewing officer based his final decision, 
the court held : ** 

The certified records which we are called upon to review are almost 
totally devoid of any factual basis for the defendant's determination — 
no doubt they reflect standard procedure in the Manpower Administration 
which probably did not anticipate that a review of its determination was 
provided by law. ... If our conclusion is correct that the Manpower 

«No. 71-C-2495, N.D. HI., Sept. 26, 1972. 




Administration's actions were discretionary, and subject to judicial 
review, however, then it is clear that they must be set aside on the basis 
of 5 U.S.C. §706(2) (A) [The Administrative Procedure Act]. United 
States V. Carlo Bianchi & Co., 373 U.S. 709 (1963). They are not sup- 
ported by the facts. 

Under the Administrative Procedure Act, 5 U.S.C. §706(1) 
(1970), the court held that it had the power to compel agency 
action unlawfully withheld, but no specific authority to remand 
the matter to the agency for development of a more adequate 
record ; consequently, the court ordered the defendants to issue 
the requested alien certifications pursuant to the subsection 14 

In a similar case arising in the same court, Bitang v. Regional 
Manpower Administration of the U.S. Department of Labor, "^^ 
plaintiffs were aliens whose certification applications had been 
denied on the ground of availability of American workers. They 
alleged that the defendant regional oflfice abused its discre- 
tion and that its actions were without rational explanation. The 
sole basis in the administrative record for defendant's determina- 
tion in each case that there were a sufficient number of American 
workers in the Chicago area available to work in plaintiffs' pro- 
fessional fields was apparent oral communications from the 
Illinois State Employment Service (ISES) to defendant that 
there were a number of people listed with that service who were 
seeking employment in plaintiffs' occupational fields. The only 
evidence of these communications was unsigned sheets of paper 
containing handwritten notes which apparently were made a part 
of plaintiffs' files. Defendant urged the inference that these notes 
were made by the certifying officer during telephone conversa- 
tions with ISES employees. The court found that the record at 
most established that on the dates for which defendant asserted 
availability of American workers, there were a number of people 
on the list who had in the past listed their names with ISES as 
seeking work and whose names had never been removed. Further- 
more, there was no indication that persons listed fell within 
federal standards of "able, willing, qualified, and available." 
Finally, the number of persons listed with ISES as seeking posi- 
tions in plaintiffs' occupations was very small. The court found 
that this latter number was not enough to "discount those who 
had falsely listed their qualifications or their lack of current em- 
ployment or who had not yet had their names removed after they 

"No. 72-C-1099. N.D. ni.. Oct. 4, 1972. 


had in fact found employment." ^" The court admonished the 
regional office for its reliance on such an incomplete record, 
stating: '*'^ 

I recognize that a certain amount of reliance upon state agency findings 
is necessary. Nevertheless, the statute conferring upon the Secretary of 
Labor the responsibility for making these determinations certainly 
requires that the duty not be completely abrogated through unexamined 
acquiescence in a state agency's ultimate conclusions. 

The court then remanded the plaintiffs' cases for action con- 
sistent with its opinion. 

In both of these cases, the court strongly admonished Depart- 
ment officials for rendering decisions on incomplete records and 
for relying on ambiguous and questionably valid evidence. 

In an analogous case, Camp v. Pitts,*^ the Supreme Court set 
forth in a per- curiam opinion the proper procedure to be followed 
when a reviewing court determines that an administrative 
agency's stated justification for informal action does not provide 
an adequate basis for review. The Court found that the ap- 
propriate standard for review is whether the Administrator's 
actions were "arbitrary, capricious, an abuse of discretion or 
otherwise not in accordance with law," 5 U.S.C. §706(2) (A), and 
that "[i]n applying that standard, the focal point for judicial 
review should be the administrative record already in existence, 
not some new record made initially in the reviewing court." *^ 
The Court went on to note that where "there was such failure to 
explain administrative action as to frustrate effective judicial 
review, the remedy was ... to obtain from the agency, either 
through affidavits or testimony, such additional explanation of 
the reasons for the agency decision as may prove necessary." ^" 
Such additional information would allow the reviewing court to 
arrive at a proper assessment of the agency's decision. 

The implication of Camp is that when an agency engages in 
informal action, such as the consideration of a certification ap- 
plication, it must be prepared to provide reasons for that decision 
sufficient to allow judicial review of the agency action; it appears 
that the Department often fails to meet these requirements. It 
is common practice among regional offices to give no explanation 
beyond the fact that American workers are available or that 


*«41 U.S.L.W. 3515, Mar. 27, 1973. 


"SO Id., at 3516. 


wages offered are substandard for the area ^^ in the initial notice 
to the alien or his prospective employer that the certification 
application has been denied. Information as to the sources of the 
information upon which denial was based and specific details 
concerning availability and adverse affect are provided only upon 
request by the alien or the prospective employer. It should be 
again noted that notice of right to appeal is not included in the 
initial notice of denial, and ignorance of that right may dampen 
desire to delve behind the meaning of the terms "availability" or 
"adverse affect." See Part III (A) (2) supra. 

A review of files in some regional offices, see note 26 supra, 
reveals striking dissimilarities in both the amount and quality of 
the information included in a file to support a certification de- 
termination. Some regional offices depend almost solely on the 
information provided by the local and State offices of the State 
Employment Services, the practice condemned in Bitang, while 
others maintain their own files and own sources of information to 
supplement such information, skeletal as it often is. Some regional 
offices maintain the complete documentation for a certification 
determination in an alien's file from the beginning of the certifica- 
tion process, while others maintain only shorthand references to 
where information can be found and little or no documentation 
to support the validity of their determination. While all regional 
offices indicate that the information upon which a denial of 
certification was based will be provided upon the request of the 
alien or his prospective employer, it is clear that the quality and 
quantity of that information vary, depending upon the regional 
office processing the application. 

It is not difficult to postulate the alien who could not gain the 
remedies provided by the cases discussed above either because 
he was not aware that such deficiencies would warrant a remedy, 
or because he lacked the resources to seek judicial review. These 
illustrative decisions and the judicial standards set forth therein, 
as well as the variations among the regions regarding the compi- 
lation of a record as the basis for a certification determination, 
make it apparent that the procedural standards for denial and 
for review of denial of certification applications should be 
formally amended to improve and standardize the quality and 
degree of specificity of the information upon which those actions 
should be based. Such formalization should serve to alert the 
alien to the treatment he may rightfully expect, and minimize 

61 If substandard wages is the basis for denial, the certifying officer will include the 
amount of the standard wage rate in the initial denial notice. 


Department reliance on an insufficient record, thereby reducing 
the number of aliens whose financial situation causes them to 
suffer from such reliance without recourse. 

5. Scope of Review and Access to the Record 

The Department's Guidelines, note 28 supra, and Farino v. 
Secretary of Labor, discussed in Part 111(A)(4) above, both 
reveal that the reviewing officer not only is permitted to, but does, 
go outside the record developed by the certifying officer in order 
to dispose of the alien's request for review. At one of the periodic 
liaison meetings between Department oflficials and the Association 
Liaison Committee, see note 39 supra, 

The Committee stated that in almost each of the . . . [Department] 
regions, the reasons given for a denial and the information made avail- 
able as the basis for such denial are invariably augmented by new 
material and additional reasons, which are made known for the first 
time in the affirmance of the denial on reconsideration, and first com- 
municated in many instances after the ninety-day period is over.""" 

This is so even though the regulations do not address the ap- 
propriate scope of review for certification denials. 29 C.F.R. 
§60. 4(c) (1972). The extent of that scope is a subject of much 
debate among members of the Immigration and Nationality Bar. 
Although these attorneys object to the exercise of de novo re- 
view, their main concern is with access during the course of 
review to the information independently developed by the review- 
ing officer. The decision of the reviewing ofl^cer is final ; no further 
administrative appeal is provided for. Id. The alien whose certifi- 
cation is denied on appeal has only two alternatives if he persists 
in his desire to emigrate to the United States: he can seek judi- 
cial review of the reviewing officer's decision,^^ or file a new ap- 
plication for certification and acquire a priority date for visa 
issuance no earlier than the date of filing the new application, 
if a certification is issued. The demand for maximum availability 
of information at the reviewing officer level is therefore clear. 
The Department asserts that de novo review is necessary to 
insure a thorough evaluation of all the ramifications of granting 
an alien employment opportunities in this country; and this posi- 
tion appears to be consistent with the policy embodied in the 

5" Association of Immigration and Nationality Lawyers Liaison Meeting with the 
Department of Labor, in Washington, D.C, July 8, 1972, see note 39, supra. [Hereinafter 
July 8 Meeting.] 

62 5 U.S.C. §§702, 704 (1970). See Bitang v. Regional Manpower Administrator, supra 
note 45. 


1965 amendments to the Act which requires affirmative action 
(certification by the Secretary) to admit immigrant aliens to the 
United States for employment purposes. But denial of alien 
access to the information independently developed by the review- 
ing officer cannot be so easily justified. And assuming that de 
novo review is not proper — thereby eliminating the possibility of 
introduction of new information — there is evidence that the alien 
often does not have access even to the information upon which 
the certifying officer bases his decision. 

According to the Guidelines issued by the National Office to the 
regional offices, the alien should be given access to all the in- 
formation used by the certifying officer in order to structure his 
appeal : ^^ 

If an applicant or his authorized representative requests clarifying in- 
formation concerning a denial of certification within 90 days of the 
denial, the clarifying information must be supplied. 

And, at the May, 1972 Convention, an Association member 
queried : "Does an attorney have a right to see the labor market 
information that has been used as a basis for denial of his client's 
application for alien certification?" The Department's response 
was "Yes." ^'* At the same Convention, however, another member 
stated : ^^ 

I have yet to obtain prior to final adjudication a photostatic copy of the 
material employed by the certifying oflUcer in response to [a] letter of 
appeal. I once did obtain a copy of the material after I complained on 
appeal to the Secretary of Labor. 

The disparity between Department policy and actual practice 
continues, as evidenced by Association statements made at more 
recent liaison meetings : ^^ 

We urged that all of the reasons for denial should be stated in the initial 
notice of denial, and all of the information on which denial is based 
should be made available when initially requested. We were advised that 
all field officers would be so instructed. 

And yet three months later it was again asserted : ^'^ 

[I]n some of the regional offices, attorneys are not permitted access to 
files to see the material that is the basis for denial. 

53 Guidelines, supra note 28, at 7. 

" Conference of the Association of Immigration and Nationality Lawyers, in New 
Orleans, May 29, 1972. 
K Wasserman Speech, supra note 19. 
"July 8 Meeting, supra note 51. 
^ Oct. 7 Meeting, supra note 40. 


It therefore appears that, although Department officials at the 
National Office have stated and continue to maintain that an alien 
is entitled to know exactly what the certifying officer's denial is 
based on, the regional offices often fail to provide access to all the 
information that resulted in a negative determination. 

Whether we are dealing with access to the information used by 
the certifying officer or to the new information developed by the 
reviewing officer if de novo review is in order, we need not 
establish the alien's right to that information since the Depart- 
ment has already acknowledged in principle its responsibility in 
this regard. What remains is for the Department to make its 
acknowledgement effective. The Department should clarify the 
scope of review by regulation amendment ; it should also mandate 
access for the alien to the information relied upon by the certify- 
ing and reviewing officers. Only with these amendments can the 
alien be assured a full opportunity to evaluate and attempt to 
refute all alleged grounds supporting the denial of his certifica- 
tion application at the final administrative level. 

B. Freedom of Information 

The National Office, as noted earlier, is responsible for provid- 
ing direction to the regional offices concerning the conduct of the 
certification program. In addition to the published regulations 
which set forth the basic procedural framework for the certifica- 
tion process, the National Office has issued Guidelines in the form 
of a 14-page supplement to the published regulations, see note 28 
supra, which provide greater specificity in certification pro- 
cedures. The National Office also distributes memoranda con- 
cerning the Department's official posture regarding specific oc- 
cupations or specific elements of the certification process; the 
contents of these memoranda reveal them to be essentially 
addenda to the Guidelines. 

The aforementioned survey of several of the regional offices 
revealed a marked confusion regarding the confidentiality of the 
Guidelines and memoranda. While some certifying officers indi- 
cated that they considered these publications to be confidential 
and not to be shown to the public, at least one certifying officer 
kept these same publications in a large looseleaf binder labelled 
"Disclosure Book" and stated that it was available for public 
inspection at any time. 

It is clear, as we have discussed previously in this Part, that 
the regulations underlying the certification program are, at best, 


skeletal. It is the above-noted publications that therefore consti- 
tute the substance of the program's operation. The dangers of 
allowing an agency to operate in significant part by unpublished 
(or sporadically published) standards are easily illustrated; ref- 
erence need only be made to Part III (A) (5) above wherein was 
discussed the Department's treatment of scope of review and 
access to the record. The absence of published procedural stand- 
ards diminishes the fairness of the conduct of the certification 
program. First, the alien, without knowledge of applicable De- 
partment Guidelines and memoranda, will be unable to preceive 
whether his application receives proper processing. Second, even 
if the alien believes that his application has not been treated in 
accordance with Department Guidelines, he can neither sub- 
stantiate his belief by reference to official documents nor use such 
documents to gain a remedy by claiming agency violation of its 
own standards. The solution to this opportunity for potential 
agency abuse of discretion is the provision of these Department 
publications to the alien. Association members maintain, how- 
ever, that despite their requests, they are unable to obtain the 
publications.^^ In order to decide whether the publications pro- 
vided by the National Ofl^ce to the regional offices must be made 
publicly available, a discussion of the statutory treatment of the 
problem of agency disclosure — the Freedom of Information Act, 
5 U.S.C. §522 et. seq. (1970) — and relevant litigation would 
appear in order. 

The enactment of the Freedom of Information Act was an 
attempt to define what information administrative agencies must 
make public and what information the agency need not disclose, 
in light of the legislative purpose "to increase the citizen's access 
to government records." Bristol-Meyers Co. v. Federal Trade 
Commission/'^ The Act is divided into three major subsections. 
Subsection (a) describes those documents which are subject to 
mandatory disclosure to the public. Subsection (b) , and the most 
controversial, specifically exempts certain materials from man- 
datory disclosure. Subsection (c) states that the Act "does not 
authorize withholding of information or limit the availability of 
records to the public, except as specifically stated [in the Act] ." 

Subsection (a) (2) (C) provides that "administrative staff 
manuals and instructions to staff that affect a member of the 
public" are subject to compulsory disclosure, and it seems evident 
that the publications discussed above fall within that definition. 

68 Id. 

W424 F.2d 935, 938 (D.C. Cir. 1970) (Bazelon, C.J.). cert, denied, 400 U.S. 824 (1970). 


The narrow exception from the disclosure requirement of 
(a) (2) (C) for "law enforcement" materials as opposed to 
"administrative" materials, see, e.g., Haivkes v. Internal Revenue 
Service, infra note 64, does not apply to the Department publica- 
tions at issue. It remains only to be determined whether these 
publications fall within the only two possibly applicable exemp- 
tions in the Act. If they do not, they must be disclosed. 

Subsection (b) (2) exempts from disclosure matters that are 
"related solely to the internal personnel rules and practices of 
an agency," (emphasis added) ; there is considerable controversy 
over the meaning of that phrase. The basic cause for the con- 
troversy surrounding the embrace of subsection (b) (2) is the 
discrepancy between the Senate and House legislative history 
concerning the meaning of that subsection. The Senate under- 
stood the exemption to be relatively narrow in scope : ^" 

Exemption number two relates only to the internal personnel rules and 
practices of an agency. Examples of these may be rules as to personnel's 
use of parking facilities or regulation of lunch hours, statements of policy 
as to sick leave and the like. 

The House Committee version, however, would exempt a broader 
class of materials : ^^ 

Operating rules, guidelines and manuals of procedure for government 
investigators or examiners . . . but this exemption would not cover all 
"matters of internal management" such as employee relations and working 
conditions and routine administrative procedures which are exempt 
under present law. 

The meaning of subsection (b) (2) has been studied extensively 
by Professor Davis, who states : ^^ 

My opinion is that the words "internal personnel rules" mean what the 
Senate Committee says, not what the House Committee and the Attorney 
General say. "Operating rules" may be "internal personnel rules" only 
to the extent that they deal with relations between an agency and its em- 
ployees, not to the extent that they deal with the relations between an 
agency and an outsider or between employees of the agency and an 

The timing of the reports by the Senate and House Committees 
is a crucial factor in evaluating these two interpretations: ®^ 

After the bill had passed the Senate on the basis of a committee report 
that was reasonably faithful to the words of the bill, the House Com- 

^S. Rep. No. 813, 89th Cong,. 1st Sess. 8 (1965). 
"H.R. Rep. No. 1947, 89th Cong., 2d Sess. 7-8 (1965). 

02 Davis, The Information Act: A Preliminary Analysis, 34 U. Chi. L. Rev. 761, 778-79 


mittee was subjected to pressures to restrict the disclosure requirements. 
It yielded to the pressures. But it did not change the bill. Instead, it 
wrote the restrictions into the committee report. These restrictions differ 
drastically from the bill as passed by the Senate. . . . The basic principle 
is quite elementary: the content of the law must depend upon the intent 
of both Houses, not just one. In this instance, only the bill, not the 
House Committee's statements at variance with the bill, reflects the intent 
of both Houses, Indeed, no one will ever know whether the Senate Com- 
mittee or the Senate would have concurred in the restrictions written into 
the House Committee report. 

The meaning of subsection (b) (2) has also been considered in 
detail by two Federal District Courts and a Federal Court of 
Appeals and all concluded that the Senate's view (and that of 
Professor Davis) of the exemption provision should prevail. ^* 
This conclusion indicates that the Department's Guidelines and 
memoranda do not fall within the meaning of the terms of the 
subsection (b) (2) exemption since they do not "deal with rela- 
tions between an agency and its employees." 

It may also be argued that the publications distributed by the 
National Office to the regional offices fall within the definition of 
the subsection (b) (5) exemption, "inter-agency or intra-agency 
memorandums or letters which would not be available by law to a 
party other than an agency in litigation with the agency." The 
test set forth in the recent Supreme Court opinion, Environmental 
Protection Agency v. Mink,^^ must be applied. As Justice White 
pointed out in Mink, the language of the subsection (b) (5) ex- 
emption "contemplates that the public is entitled to all such 
memoranda or letters that a private party could discover in litiga- 
tion with the agency." '''''' He discussed the incorporation into the 
subsection (b) (5) exemption of the recognized rule that con- 
fidential intra-agency communication is privileged from dis- 
closure. He noted that such privilege exists in order to preserve 
frank discussion of legal or policy matters in writing within 
Government agencies.''^ The preservation of candor within Gov- 
ernment agencies is necessary to allow the free exchange of 
opinions; there is no such difficulty encountered in the distribu- 
tion of facts within Government agencies. The Mink opinion 
analyzes subsection (b) (5) on the basis of distinctions to be 
drawn between opinion and fact, with the former exempt from 

«*Hawkes v. Internal Revenue Service, 467 F.2d 787 (6th Cir. 1972); Benson v. 
General Services Admin,, 289 F. Supp, 590, 594, (WD. Wash. 1968) aff'd. 415 F.2d 878 
(9th Cir. 1969) : Consumers Union of United States v. Veteran's Admin., 301 F. Supp. 
796, 801 (S.D.N.Y. 1969). 

«41 U.S.L.W. 4201, Jan. 22, 1973. 

" Id., at 4205. 

^ Id., at 4205. 


disclosure and the latter subject to disclosure. It would appear 
that the Department's publications are neither opinion nor fact 
but rather directives representing conclusions reached after con- 
sideration of all relevant law and internal agency policy and 
opinion. Just as this type of subject matter suggests that the 
publications are "manuals" for the purpose of subsection (a) 
(2)(C), so too does it suggest that the reasons expressed in 
Mink for non-disclosure (preserving candor) are inapplicable. 
The publications do not, therefore, appear to be subject to the 
subsection (b) (5) exemption. 

Consistent with what appears to be the weight of authority 
then, the Department's refusal to disclose its Guidelines does not 
find support within the exemptions to the Freedom of Informa- 
tion Act. They appear, therefore, to be subject to mandatory dis- 
closure under subsection (a)(2)(C). In addition to the dis- 
closure requirement of the Freedom of Information Act, ordinary 
standards of administrative fairness dictate disclosure of these 
Department publications. Once these publications are made avail- 
able to the public either by publication in the Federal Register or 
some acceptable alternative, an alien will know more nearly what 
treatment he can expect to receive when he applies for a labor 
certification ; and he will be able to use this information in an 
effort to insure standard treatment during the certification de- 
cision, or in seeking review of a certification denial should he not 
have been accorded the procedural protections required by the 
National Office. 

IV. Conclusions 

The policy behind the labor certification program was to pro- 
tect American workers from an influx of skilled and unskilled 
foreign labor. 

The need for alien workers to meet the nation's needs in the production 
of goods and services reflects, of course, an imbalance between the de- 
mands for workers in specific skills, and in particular areas, and the 
availability and mobility of American workers able to meet those require- 
ments. A major goal of our manpower programs is to build up a force of 
American workers able to meet all national needs, to the greatest pos- 
sible extent. To the extent this goal is attained, the need and opportunity 
for alien workers to fill jobs in America will of course diminish. A better 
balance between the skills and educational attainment of American 
workers, and the demands of employers would have greatly reduced 


dependence on aliens to fill jobs in this country, even in 1969 when 
unemployment was at a relatively low water-mark.'" 

The following recommendations are aimed at clarifying some 
aspects of the existing procedures and creating additional pro- 
cedures or policies where omissions have caused hardships for 
aliens who seek such certifications. 

•* Brown Address, supra note 30. 



Jerry L. Mashaw* 


No attempt has been made to study the claims adjudication 
process in every benefit and compensation program that is feder- 
ally financed or administered. However, a number of such pro- 
grams, social security disability benefits, veterans' pensions and 
compensation, the Federal Employees' Compensation Act pro- 
gram, the Longshoremen and Harbor Workers' Compensation 
Act program, civil service disability retirement benefits and 
federally funded categorical public assistance programs, have 
been reviewed in some detail. The proposals and discussion which 
follow reflect general principles which are thought applicable to 
all of these somewhat disparate benefit and compensation sys- 
tems. A solicitation of views from agencies administering other 
benefit and compensation programs has not produced any com- 
ment which casts doubt on the ability to generalize from the 
group of programs studied. A short description of the adjudica- 
tion process and current statistical quality assurance practices in 
the programs studied is appended to this report. 

* Professor, University of Virginia School of Law; Consultant to the Committee on 
Grants and Benefit Programs. 


Part I: Positive caseload management should be recognized as 
essential to the accurate, timely and fair adjudication of claims 
of entitlement to benefits or compensation. A positive caseload 
management system should include three connected operations : 

(1) The development of standards and methods for measuring 
the accuracy, timeliness and fairness of agency adjudications; 

(2) the continuous evaluation of agency adjudications through 
the application of those standards and methods; and (3) the 
use of the information gathered in the course of such evaluation 
to identify needed improvements in adjudicative performance. 


Coverage, (a.) A "claim of entitlement" includes a claim under 
any program in which the benefit or compensation sought by the 
claimant is one which is required to be made available to him on 
the satisfaction of certain statutory criteria. For example, a 
claim for OASDI benefits would be covered by the recommenda- 
tion; but a request by a small business for a favorable exercise 
of discretion concerning its loan application would not be covered, 
nor would an application for a research grant from the National 
Institute of Health. The administration of discretionary grant or 
benefit programs having reasonably well articulated standards 
for judgment might well be improved by the adoption of some of 
the techniques suggested in the recommendation. However, be- 
cause the obligation of positive caseload management is grounded 
at least in part in notions of agency responsibility to provide 
assistance to parties making claims of legal right, discretionary 
determinations have not been included. 

(b.) "Benefits or compensation" includes any benefit or any 
compensation for injury, whether in money or in kind, which is 
made available out of federal funds or with respect to which a 
federal agency has assumed the responsibility for determining 
the validity of claims to entitlement. Public welfare programs, 
social insurance programs, employee pension plans and work- 
men's compensation payments are all within the reach of the 
recommendation to the extent that federal funds or federal ad- 
ministration is involved. 

Although it is conceivable that the federal government might 
fund a non-discretionary benefit program through grants with- 
out providing the administering agency with the authority to 
condition those grants on the use of proper methods of adminis- 
tration in making benefits determinations, no such program 



presently exists. Hence, the agencies administering federal grant- 
in-aid programs in support of benefit programs involving claims 
of entitlement are covered by this recommendation, along with 
agencies directly administering benefit programs involving federal 
funds and agencies making claim determinations involving the 
liability of third parties for benefits or compensation. 

(c.) An "adjudication" is any determination allowing or dis- 
allowing a claim to benefits or compensation. Allowances or dis- 
allowances at all levels of the claims processing system are meant 
to be included, whether or not the determination made is entered 
after opportunity for a hearing. 

Rationale. Positive caseload management in benefit and com- 
pensation programs might be viewed as the management side of 
constitutional or statutory "due process." Procedural safeguards 
whatever their source are designed to ensure an appropriate op- 
portunity for affected parties to put relevant facts and arguments 
before authoritative decision-makers. "Fairness" to the litigant 
or claimant is generally taken to be the principal value served by 
procedural devices such as specific notice of issues or the op- 
portunity to produce evidence, to argue orally and to confront 
and cross-examine the adverse witness or the right to appeal 
adverse determinations. These procedural safeguards obviously 
also serve other closely associated ends such as promoting the 
correct finding of facts and the appropriate application of law to 
fact. Adjudicatory systems for the finding of facts and for the 
authoritative application of law to fact, which contain adequate 
procedural safeguards and appellate checks, are thus often 
thought of as self-correcting mechanisms for the fair and ac- 
curate resolution of legal disputes or the determination of legal 
rights or status. 

In an adversary judicial proceeding involving claims of private 
right, which tends to be the archetype of adjudicatory due 
process, reliance on procedural safeguards and litigant initiative 
as the guardians of fairness and accuracy is generally sensible. 
There are problems to be sure in designing systems in which fair 
opportunity to contest does not result in an equally fair oppor- 
tunity to obfuscate and to delay. And the solution of these diffi- 
culties has focused traditionally on adjustments in the procedural 
or evidentiary system, the adjective law governing the process 
of adjudication. However, even with respect to judicial determi- 
nation of private claims there has been some movement away 
from reform of adjective law as the means of assuring accurate, 
fair and timely adjudication. This movement is evidenced by an 


increasing concern in recent years with the development of tech- 
niques of judicial administration which might make the process 
of adjudication more efficient, and by an increasing willingness 
to view the adjudication process as one in which the positive 
management of cases and case flow to achieve accurate and fair 
results is an appropriate role for the adjudicator. See, e.g., Jones, 
ed., The Courts, the Public and the Law Explosion (1965) ; 
Hufstedler, New Blocks for Old Pyramids: Reshaping the Judicial 
System, 44 U. So. Calif. L. Rev. 901 (1971). The fundamental 
premise of this recommendation is that a posture of positive 
management of the adjudicatory process to ensure quality is not 
only appropriate, as in the judicial system, but essential in pro- 
grams where the administrative adjudication of claims to benefits 
or compensation is involved. 

Perhaps the most general consideration which supports a posi- 
tive caseload management policy is the attenuation of the ad- 
versary context in the administration of programs involving bene- 
fits and compensation. The adjudication of claims in such pro- 
grams is a part of a positive legislative program to insure or 
protect the claimant against certain economic hazards. This is 
obvious in benefit programs such as disability insurance or public 
assistance or veterans' compensation — programs in which public 
funds are expended. Claims adjudication is the means by which 
the public interest in providing the benefit is conjoined with the 
claimant's desire to receive it. While agencies may have some 
interest in fund protection and in avoiding erroneous payments, 
they are also charged with the public duty of paying qualified 
claimants. The claims adjudicator's role, whether at the initial 
consideration of a completed claim file or after oral hearing, is 
essentially the same, to provide benefits to eligible individuals. 
In large measure this function is discharged through non- 
adversary and informal procedures. No one acts specifically as 
the representative of the government, and the claimant is usually 
unrepresented and often uninformed concerning the details of 
proving up his eligibility. In this context the model of the passive 
adjudicator ruling on the basis of facts and arguments presented 
by opposing parties is not appropriate. Agency policy and prac- 
tice recognize that claims adjudicators must assist to some degree 
in the development of facts, as well as sit in judgment on evi- 
dence presented to them, in order to comply with the agencies' 
general responsibility for proper administration of the law. 

HEW's Handbook of Public Welfare Assistance reflects the 
position of most benefit determining agencies : 


Relying on the individual as a primary source of information does not 
relieve the agency of the responsibility to recognize the differing capaci- 
ties of applicants and recipients to discharge their responsibilities to the 
agency. Some can provide or obtain needed information after the agency 
explains what information is needed; others will need specific directions 
to sources of information; others may want, or have to rely on, the 
agency to obtain the information for them. (Part IV, § 2400). 

Compensation programs such as Longshoremen and Harbor 
Workers' Compensation or Federal Employees' Compensation 
involve a higher degree of adversariness. But again adversary 
procedure is tempered by responsiveness to the basic purpose of 
these programs — the provision of prompt aid to covered em- 
ployees — a purpose which the fault system and judicial due 
process failed to serve adequately. Students of workmen's com- 
pensation tend to agree that the extent to which the beneficent 
purposes of the compensation scheme are realized depends in 
large degree upon the extent to which the agency assists in the 
development and settlement of claims prior to a contentious 
hearing. Report of National Commission on State Workmen's Com- 
pensation Laws, Chapter 6, 99-114 (1972). Indeed, in FECA 
cases, while compensation payments are charged against agency 
budgets, the contested claim is very rare. And in the Longshore- 
men's program, potentially the most adversary of the federally 
funded or administered benefit or compensation programs, ninety 
percent of the cases are disposed of prior to hearing. 

In short the promotion of accuracy and fairness which results 
from adversary contests surrounded by procedural safeguards is 
largely absent from benefit and compensation programs. Nor is it 
desirable that contentious procedure be introduced. Many pro- 
grams deal with huge volumes of claims and a large percentage 
of those claims are not complex or diflficult. A contentious pro- 
cedure at initial processing levels would almost certainly intro- 
duce inordinate delay. Moreover, benefit and compensation claim- 
ants are often the aged, the infirm, children and other dependent 
segments of the population. Reversion to a system which put the 
full burden for making his case on the claimant would hardly be 
a contribution to fairness or accuracy in claims adjudication. 
Even when the claimant is exercising appeal or de novo hearing 
rights after an initial denial of his claim in whole or in part, pro- 
grams involving the payment of public funds employ a non- 
adversary procedure in which the government is not specially 
represented and an obligation to aid the claimant in presenting 
his case is still recognized. See, e.g., Dixon, The Welfare State and 
Mass Justice: A Warning from the Social Security Disability 


Program, 1972 Duke L. J. 681, 694-95. In this context, accuracy 
and fairness in adjudication should be promoted through proc- 
ess controls other than, or at least in addition to, procedural 

A possible check on inaccurate or unfair initial adjudications 
is the appeals process within the administrative adjudication sys- 
tem. And, of course, there is some correction of erroneous de- 
terminations by this method. Appeal as a check on the quality of 
adjudications has some serious deficiencies, however. One is the 
lack of an appropriate appellant where affirmative action is 
taken on the claimant's request and payment is to come from 
government funds. Unless the claimant disagrees with the amount 
of the award no appeal will be taken, and in some programs 
initial decisions are positive, that is result in an award to the 
claimant, in 90+ % of the cases. Even where the decision is nega- 
tive, appeals are highly and mysteriously selective. For example, 
in 1970 nearly one-half of the claims for social security disability 
payments (excluding technical denials) were rejected. From this 
universe of denied applicants about eleven percent requested a 
hearing. (The figures from which these rough computations 
were made are reported in Dixon, supra.) My attempt to figure 
the appeal rate in public assistance programs from various sta- 
tistical reports of the National Center for Social Statistics reveals 
that fair hearing requests were running at only about two per- 
cent of potentially appealable determinations during the most 
recent six-month period for which statistics are available, and 54 
percent of those appeals were lodged in three states. (Included 
in the universe of appealable public assistance decisions were all 
grants, denials, alterations, and terminations, save terminations 
due to death, because appeals may be and often are lodged con- 
cerning the amount of a grant.) 

We simply do not know enough about the self -selection process 
for appellants to determine how these appeal rates ought to be 
interpreted. The rates seem quite low, but do they reflect a high 
degree of claimant satisfaction, a low error rate for initial de- 
terminations, poor information about appeal rights or what? 
Without such information we certainly cannot conclude that the 
opportunity for appeal is an effective check on the fairness 
and accuracy of even initial denials of claims for benefits or 

An additional problem with "appeals" as a means for con- 
trolling the quality of the agency adjudicative process is that the 
appeal is often not an appeal on the record of the initial deter- 


mination. It is rather a de novo determination on an open 
record which may be supplemented. Hence, a finding on appeal 
which diverges from the initial determination on the claim is 
not necessarily a finding of error. It is merely a different finding 
which may have been made on quite different facts. For example, 
in disability adjudications the claimant is often becoming pro- 
gressively more disabled and hence the initial denial and the 
award on appeal may both be correct. This indeterminateness 
renders the results of appellate review of limited utility in 
evaluating the quality of initial decisions. 

Moreover, the process of hearing appeals does not of itself 
produce information on the timeliness of claims processing or on 
patterns of problems which may be emerging at the initial levels 
of adjudication. The orientation of the appeal or hearing process 
is toward the problems associated with the individual claim or 
claimant involved in a particular hearing, not toward the quality 
of the claims process as a whole. 

The foregoing remarks should not, of course, be taken as indi- 
cating that the procedural safeguards often associated with ad- 
versary process and opportunities for appeal have no place in the 
adjudication of claims of entitlement to benefits or compensation. 
In certain situations specific hearing rights have been found to be 
constitutionally required ; statutory and regulatory provisions 
customarily emphasize procedural safeguards and these safe- 
guards are often of great importance to particular claimants. 
The point is merely that in benefit and compensation programs 
the obligation to provide fair, accurate and timely determina- 
tions can be promoted to only a limited degree by these tech- 
niques. In order to fulfill that obligation agencies must go further 
to develop a positive caseload management system which will 
assure a high quality adjudicative product. Indeed, most agencies 
have accepted that general responsibility. This recommendation 
and discussion merely seeks to provide a conceptual model and 
to draw out the implications of such a system for use by agencies 
in improving their performance. 

Some general conceptual issj^es. While the development of any 
positive caseload management system (hereinafter occasionally 
PCMS) must reflect the needs and realities of the particular bene- 
fit or compensation program involved, some general statements 
about approaches to such a system may be useful. Specific tech- 
niques for collecting, analyzing and utilizing data are discussed 
more fully under Parts II-IV of the recommendation. 

Development of standards and methods for the evaluation of 


"accuracy," "timeliness" and "fairness" in adjudication, the first 
step in positive caseload management, is not a simple matter. 
To begin with the question of "accuracy," decisions might be 
said to be accurate if facts are correctly found and an appropriate 
application of relevant program policy is made to those facts. 
However, the "correctness" of fact finding and the "appropriate- 
ness" of policy application often involve questions of judgment. 
For example, the apparently simple determination of a claimant's 
age for purposes of social security retirement benefits may, in 
the absence of official birth records, involve the weighing of 
contradictory evidence from numerous sources. Any evaluation 
of the "correctness" of the adjudicator's ultimate finding of fact 
with respect to age will thus involve a judgment concerning the 
soundness of the adjudicator's judgment. In order to make the 
evaluation of the quality of the adjudication process with respect 
to accuracy of fact finding more realistic, and hence more mean- 
ingful, some refinement of the evaluation beyond the simple 
notation by an evaluator that an incorrect finding was made may 
be required. For example, the evaluation review might dis- 
tinguish between "substantive errors" and "judgment deficien- 
cies." The latter category would cover situations in which a 
reasonable man might have found as the adjudicator did but the 
reviewer thinks that a different finding was indicated by the 

A slightly different problem of appropriate methods for de- 
termining accuracy involves the question of whether one is in- 
terested in correct fact finding on the record that was before the 
adjudicator or in "correctness" in some more objective sense. To 
continue the previous social security example, a finding that a 
claimant is of a particular age may appear correct given the evi- 
dence compiled from family sources, but records from public 
school departments would have contradicted that evidence had 
they been secured. Record review might classify the determina- 
tion as correct, whereas a review involving de novo redevelop- 
ment of the case would find an error. A PCMS should probably be 
interested in both types of error, although it may seek to obtain 
information about them in different ways. 

For example, experience with problems unearthed by reviews 
involving a complete redevelopment of cases may suggest that the 
agency instructions to adjudicators be clarified to specify the 
kind of development effort necessary in identified types of cases. 
As urged in Part IV of this recommendation quality assurance can 
thereby become a part of policy and operational control improve- 


ment. Record reviews can then be made sensitive to situations 
involving potential substantive errors. For example, a review of 
"case development effort" can be made on the basis of the docu- 
mentation in the claim file and an "error" assigned for failure to 
include evidence or a notation that evidence was sought from 
certain predetermined sources. Hence the poorly developed evi- 
dence on age in the preceding example might yield not a finding 
of substantive error, but a finding of a case development "error." 

Standards for accuracy, such as permissible errors per hundred 
cases, are also diflScult to develop. Ideally every system should 
establish minimum levels of adequate performance and goals for 
optimum adjudicative performance. But how are they to be set? 
Zero errors can be set as the target, but that goal is unrealistic 
and hence of limited value as a management tool. A moving target 
such as the mean or median number of errors per adjudication 
unit during the previous reporting period can be used to provide 
feedback on how various districts or regions or, in some cases, 
individuals stack up against adjudications for the system as a 
whole. But, of course, it may be that everyone should be doing 
better. When in this sort of numbers game it is well to remember 
the aphorism repeated several times by a program analyst in- 
terviewed in connection with this report, "Errors are for analysis, 
not for counting." 

"Timeliness" obviously is highly susceptible to mathematical 
expression, reporting and standard-setting. However, goals or 
minimum standards of performance have the same problems 
here as in the area of substantive errors — they are dependent on 
experience and management purpose. Two additional and some- 
what special problems with timeliness evaluation also bear men- 
tioning. The first is the potential for timeliness evaluation to be 
perceived as oppressive if used to make judgments about in- 
dividual adjudicators. The second is the potential impact of time- 
liness evaluation on other adjudicative goals, such as, substantive 
quality or first-in-first-out processing of claims. These problems 
are similar to ones recently ventilated in congressional hearings 
involving claims that Internal Revenue Service agents were 
evaluated on the amount of deficiencies collected from taxpayers. 
The first problem can be dealt with by a sensible and sensitive 
personnel policy and a practice of reporting timeliness data in 
terms of management units larger than an individual adjudicator. 
The second problem should be solved by using a PCMS which 
evaluates both quality and speed and by refining the statistical 


analysis of processing time so that it reveals "creaming" of easy 
cases to meet timeliness goals. 

"Fairness" as a separate criterion of system performance is 
somewhat redundant with accuracy. If findings of fact are correct 
and application of policy is appropriate, decisions should be fair. 
However, we have already mentioned the possible shortcomings 
of "accuracy" evaluations as a means of determining whether 
the claimant got that and only that to which he was entitled. 
With respect to "judgment calls" or PCMS evalutions solely on 
the basis of record evidence, situations in which management 
evaluation and control of accuracy is tenuous, fairness can per- 
haps only be appraised by an independent evaluation of the 
"process" elements of adjudication. Treatment of "fairness" as a 
distinct goal in adjudicating claims and the separate evaluation 
of fairness through the PCMS tends to promote this focus on 
process elements. A supplementary check on fairness should thus 
be directed at those procedures and routines in adjudicating 
claims which are meant to get the relevant facts, policies and 
arguments before the adjudicator and to facilitate sound decision- 
making — things such as notice of issues, case development effort, 
articulation of the bases for decisions and explanation of op- 
portunities for appeal. 

The basic standards of fairness should be quite straight- 
forward — compliance in adjudication with those procedures and 
routines prescribed by law and by agency policy. Beyond those 
standards, positive caseload management with fairness as one of 
its goals implies an attempt to determine the extent to which 
procedures and routines might be altered to provide higher 
quality, that is more accurate and/or expeditious, adjudication 
of claims. 

Continuous evaluation with respect to established standards or 
indicators of quality, the second step in positive caseload manage- 
ment, requires little comment here because questions of evalua- 
tion technique will be addressed further in Parts II and III of 
the Recommendation. However, it may be worthwhile to stress 
the word "continuous." Because effective management requires 
the ability to perceive trends in adjudication performance and to 
relate quality data to program changes and exogenous factors 
which influence program performance, positive caseload manage- 
ment implies a continuous monitoring function. Merely occasional 
collection and evaluation of data will not provide the necessary 
bench marks of performance necessary for effective action, al- 
though the periods with respect to which data is collected (month. 


quarter, year, irregular intervals) will of course depend upon 
the program, its resources and the type of information sought. 
The utilization of data to improve adjudication quality, the 
final PCMS operation, involves the exercise of management judg- 
ment of two sorts: The first is analysis of why errors or delay 
occur. The second is what should be done to bring about desired 
improvements. Part IV of the Recommendation addresses itself 
to an issue of agency structure which bears on these judgments. 

Part II. As part of their positive caseload management program, 
agencies should begin immediately to explore, develop and 
implement statistical quality assurance reporting systems that 
will indicate the accuracy, timeliness and fairness of claims 
processing . In designing such systems, agencies should consider 
the need for information of a type that: 

a) Reflects differences in the types of ca^es and types of 
issues adjudicated and the stages of the administrative process 

b) Identifies the management unit or, where appropriate, 
the individual adjudicator involved in order that effective 
action may be taken to reinforce success and to improve 

c) Permits separate evaluation of (1) substantive de- 
cision-making, (2) case development effort and (3) proce- 
dural regularity; 

d) Enables separate evaluation of particular functions of 
the decision process (e.g., issue statement or evaluation of 
evidence in substantive decision-making). 


"Statistical quality control" or "statistical quality assurance" 
is simply the use of statistical techniques, which may involve 
sampling, to compile data on the indicators of quality that have 
been determined to be relevant for a particular program. Where 
they may appropriately be employed, the use of sampling tech- 
niques has a number of positive effects on positive caseload 
management: (1) It reduces the costs of monitoring quality on 
a continuous basis. (2) It tends to force a concentration in im- 
portant caseload management concerns, e.g., the delineation of 
the distinct elements of the adjudication process and the analysis 
of their contribution to high quality end products. (The purpose 
of statistical sampling is necessarily analysis and evaluation as 


a basis for process improvement, a purpose which may be con- 
sidered of secondary importance when an agency reviews 100% 
of its initial decisions for correctness.) (3) The assembly of 
sample data produces a patterned feedback on the types of errors 
which are being made and permits the agency to distinguish 
random, and essentially uncontrollable error, from recurrent 
errors of a similar type or by the same adjudication unit which 
can be brought under control. 

Obviously the more detailed the data provided by a statistical 
quality assurance reporting system, the more useful it will be in 
pinpointing problems and suggesting reasons for their existence. 
The sub-parts of Part II of the Recommendation suggest a series 
of ways in which data might be collected to promote analysis and 
resolution of adjudication problems. Some, but not all, of the sug- 
gested types of information is collected by each of the existing 
statistical quality control programs described in the Appendix 
to this Report. Data collection practices must, of course, be 
tailored to individual programs, but the suggestions made em- 
body what are taken to be sensible practices that should be 
followed where practicable. 

a) The suggestion here is quite straightforward. By "types of 
cases" one might mean simply to what program the claim relates. 
The Bureau of Hearings and Appeals in the Social Security 
Administration, for example, processes retirement and survivors 
insurance cases, disability cases, and Medicare cases and has 
processed black lung benefit claims. In order for its statistical 
data to reveal anything useful, compartmentalization by program 
is required. However, agencies should go considerably further in 
devising useful case categories. To continue the same example, 
BHA collects timeliness data which reveals whether the case was 
dismissed for technical reasons, involved a claimant-initiated post- 
ponement, was a "no-hearing" case, or was a case in which agency 
development was required. This data gives the agency a better 
idea of how its information on timeliness within a general cate- 
gory of claims should be evaluated, because it knows something 
about the contribution of dismissals, claimant postponement of 
hearings, the hearing itself and agency development of cases to 
processing time. 

By "types of issues" is meant the specific statutory or regula- 
tory criteria and the factual issues involved in determinations. 
For example, the Veterans' Administration breaks issues down 
into two major categories — rating of disability and payments 
authorization. Within "disability rating" issues may be further 


divided into determinations of whether the disability is service 
connected and the determination of the appropriate extent of 
disability from the rating schedule. And of course these issues 
may be further subdivided into sub-issues which respond to the 
criteria for service connection and the evaluation of the extent 
of disability. Obviously a notation that an error involves an 
"incorrect application of the rating schedule" is considerably 
more meaningful for management purposes than a simple nota- 
tion that the case contains an error. Information that the case 
was a "back case" or a "nervous disorder" is even more useful 
in identifying the source of the problem. A pattern of similar 
errors would suggest, for example, that there is a need for im- 
provement in the schedule or in the instructions for its use. 

Detailed information can, of course, begin to overwhelm ad- 
ministrators and to impede management rather than aid it. One 
solution to this problem is to reduce detail as information is re- 
ported up through the supervisory system. The immediate super- 
visor of an adjudication unit in a district office needs and can 
manage much more detailed information than the bureau or 
administration director in the central office. 

By "stages of the administrative process" is meant simply a 
breakdown into categories such as initial decisions, decisions on 
reconsideration, decisions on continuing eligibility, decisions on 
appeal and so on. 

b) Obviously corrective or reinforcing action cannot be taken 
unless the supervisory staff knows where to direct its interest. 
Normally, sampling will not produce reliable information on in- 
dividuals, and hence it can be used only to evaluate units, such 
as a regional or district office, which produce a large number of 
decisions. However, most statistical quality asurance (herein- 
after occasionally "SQA") evaluation routines should also include 
the return of sample files for redetermination when errors show 
up in the SQA review. There is certainly value in having errors 
brought to the attention of individual adjudicators when files are 
returned, and hence information concerning who made the errone- 
ous decision should be available. Moreover, at some levels of 
the claims process, for example appeals boards, the review 
sample may be 100% of the decisions. Here compilation of 
individual adjudicator performance is clearly reliable and 

The approach to the correction of error on the reinforcement of 
high quality adjudication effort will, of course, vary from pro- 
gram to program. In some instances administrative law judges 


are the adjudicators and their impartiality must be protected. In 
others, state personnel are involved in administering programs 
w^hich are in whole or in part federally funded. 

c) While the major interest of program management is the 
timeliness, accuracy and fairness of substantive decisions, two 
aspects of the decision process — procedural regularity and agency 
case development effort — may be singled out as requiring specific 
attention in an adequate statistical quality assurance system. 
Obviously both procedural regularity and case development 
effort bear on the accuracy and timeliness of substantive decision. 
Accurate, and hence in one sense "fair," decisions may occur on 
the basis of inadequate case development and irregular pro- 
cedure; but such lapses certainly do not promote the goals of 
substantive accuracy. Moreover, poor development and pro- 
cedural irregularity may produce claims records which support 
the "accuracy" of judgments which would be considered inac- 
curate were the record more complete. As previously noted, this, 
appearance of "accuracy" may be reflected in a quality assurance 
review based on the record. Thus lapses in the decision process 
may not only produce error but also effectively hide it. Perhaps 
more importantly, procedural regularity and claims development 
effort have a special relevance to the actual and perceived fair- 
ness of adjudications. A consistent high quality in adjudication 
procedures and in agency case development effort is imperative if 
like cases are to be revealed, perceived and treated as alike. 
Hence, it would seem necessary to collect data on both of these 
elements of the decision process in any statistical quality assur- 
ance program which treats fairness as a program goal in the 
adjudication of claims. 

d) Analysis in terms of functions is a means for making more 
specific the evaluation of substantive decision-making, case de- 
velopment and procedural regularity. Each of these aspects of 
claims adjudication can be broken down into the operations that 
should be carried out by adjudicatory staff. Under case develop- 
ment, for example, the operations might be broken down into 
items such as collecting medical records, obtaining vocational 
evidence, scheduling necessary medical examinations, appropriate 
follow-up action and so on. The possibilities for further calibra- 
tion are virtually endless and obviously require the exercise of 
management judgment concerning what level of detail in quality 
assurance information is worth the cost of collecting it. 


Part III. Agencies should employ such other techniques for gath- 
ering information on their adjudication process, including field 
investigations and special studies, as are required for the 
evaluation of accuracy, timeliness and fairness. Agencies should 
be particularly sensitive to the need for better information on 
the extent to which claimants' personal resources, social status 
and access to representation or other assistance may affect the 
adjudication of claims. 


A well-designed statistical quality assurance system can pro- 
vide a continuous flow of information concerning the quality of 
adjudications. However, it cannot provide all the information 
necessary for effective management of the adjudication process. 
For one thing the data collected by such sampling techniques 
must often be computer assembled. Hence, the information must 
be limited to that which is easily codable. This is likely to pro- 
duce tabulations of the incidence of error but little information 
on the causes of errors. Hence, the SQA system often merely 
alerts the agency to apparent problems which must be investi- 
gated further in order to determine whether the problem is real 
and what should be done about it. 

Moreover, the reliability of sample data decreases with the 
size of the sample, or perhaps more accurately, potential varia- 
tion of the sampled universe from the information provided by a 
particular sample increases as sample size declines. Hence, in- 
formation derived from a sample that is drawn to be highly 
reliable concerning a regional office may be quite unreliable with 
respect to a particular adjudication unit within that region. For 
example, statistical quality control data on state public assistance 
determinations may be reliable for the state as a whole, but it 
tells one very little about individual county welfare offices who 
do the actual adjudications. Behind the error rate for the state 
might lie some county offices which have nearly perfect perform- 
ance and others whose record is disastrous. Periodic audits or 
field reviews which deal with smaller adjudication units in depth 
must be used along with statistical quality control procedures to 
provide adequate information for proper oversight of the adjudi- 
cation process. 

SQA data may be seriously deficient concerning other prob- 
lems of considerable moment in the provision of timely, fair and 
accurate adjudication of claims. For example, when the SQA 
data is compiled by reviewing case files there is no independent 


check on whether the information in the file reflects the true 
facts. And, in large programs it may be much too expensive to 
conduct SQA reviews other than by analysis of the files. Hence, 
without additional quality assurance effort and application of 
agency processes, policies and case development routines may be 
producing errors which never show up. These sort of errors can 
only be found and dealt with by reviews which redevelop cases 
ab initio. 

One such approach is the Social Security Administration's 
Evaluation and Measurement System which is designed to vali- 
date its claims policies and procedures. Each month 1,000 re- 
cently completed adjudications are assigned to specially trained 
personnel who redevelop the claims and who seek out the best 
available evidence on every issue involved in eligibility. These 
determinations are then compared with the initial, routine de- 
cisions to see if any significant differences appear. If so, that is 
an indication that an investigation should be made into means by 
which the reality as determined by the usual claims process might 
be made more consonant with "objective" reality as determined 
by the much more intensive redevelopment. 

A similar type of issue that should be of concern to agencies 
is the question of whether inaccuracies, unfairness and tardiness 
are randomly distributed among claimants. Although agencies 
accept a responsibility for assisting in claims development, there 
is nevertheless some considerable reliance placed on claimant 
initiation and development of claims in all benefit and compen- 
sation systems. Hence one might wonder about the extent to 
which agency assistance in developing claims neutralizes factors 
such as the claimant's educational level or access to independent 
technical resources (lawyers, physicians, etc.). Are those who are 
less well-endowed personally and financially, or perhaps those 
who are the objects of social prejudice, at a disadvantage in the 
claims process? Because the information necessary for statistical 
correlations which would begin to answer these questions is not 
routinely collected in case files, SQA reviews are not good ve- 
hicles for getting at the answers. Nor could all of the requisite 
information be routinely collected when processing cases without 
suggesting to claimants that facts which are not relevant to the 
adjudication of claims are indeed relevant. The only technique 
for analyzing this aspect of adjudication quality is the special 


Part IV. The positive caseload management program should 
facilitate not only objective evaluation of the agency's process- 
ing operations, but also the effective utilization of quality 
assurance information in policy formation and operational 

There are two major requisites for a successful quality assur- 
ance program. The first is that the collection of information on the 
quality of adjudications not be subject to the control of the ad- 
judicators whose product is being evaluated. The second is that 
the information be developed in such a way that it is useful to 
and used by those in charge of adjudication in improving adjudi- 
cation performance. These considerations suggest that consider- 
able care must be taken to ensure the independence of the quality 
assurance staff without pushing them into a detached position in 
the agency from which they, and their evaluations, have no in- 
fluence on policy. 

Perhaps two principles might be of some use in dealing with 
this structural problem. The first is that while measurements or 
data collection must be done through procedures which will as- 
sure independence from those responsible for adjudication, the 
development of policy concerning what information will be col- 
lected and the interpretation of results must be carried out in 
connection with those who have the adjudication responsibility. 
A second is that the evaluator should always report his findings 
at least one supervisory level above the level whose performance 
he is evaluating, although, of course, the information should also 
be made available to the evaluated unit as well. Unless both of 
these principles are observed evaluation may be unsound or 
irrelevant and sound and relevant analysis may go unheeded. 

The structure of the quality assurance program in the Bureau 
of Disability Insurance in the Social Security Administration 
again provides an attractive model. Statistical quality assurance 
reviewers in the Bureau are independent of the line adjudicative 
staff and have no adjudicative responsibilities. Sampling is done 
in a fashion which effectively camouflages the cases that will be 
drawn for review. And questions of policy on what data is to be 
collected, what standards are to be set for the various quality 
criteria and what action is to be taken on the basis of informa- 
tion revealed by SQA reviews are committed to a Quality Assur- 
ance Council composed of the representatives of the five major 
divisions in BDI, including Quality Assurance. Validation of the 
Bureau's policies through the Evaluation and Measurement Sys- 


tern is committed to a separate staff in the Office of Research 
and Statistics which reports directly to the Commissioner. 

Although this recommendation does not purport to deal with 
the range of devices which might be employed to deal with dis- 
covered defects in the adjudication process, it is perhaps worth 
mentioning that the available alternatives include both major 
policy change and doing nothing. Intermediate responses might 
include increased training, better policy definition, the institution 
of special checks on troublesome types of cases, or the provision 
of increased technical resources to adjudicators or claimants. 
Because effective action to make the adjudication of claims fairer, 
more accurate and more expeditious is directed to systemic prob- 
lems rather than individual errors and depends ultimately upon 
the will of the agency to act, the management side of due process 
can never wholly supplant the need for the more traditional pro- 
tection of procedural safeguards, and appellate review. 


Descriptive Appendix on Statistical Quality Control in Selected 
Programs Involving the Adjudication of Claims of Entitlement 
to Benefits or Compensation 

I. Social Security Disability* Insurance 

The Social Security disability program has a rather complex decisional 
process, involving determinations by state agencies, four levels of decision- 
making at the federal level, and judicial review in the federal district courts. 
At the initial determination stage, a state agency team makes a recommended 
decision which is reviewed on a sample basis by the Bureau of Disability 
Insurance (BDI) central office in Baltimore. No hearing is held. The decisions 
are based on written medical reports from the claimant's physicians and, if 
requested by the state agency, examination reports from private consulting 

Dissatisfied claimants receive a reconsideration, upon request, in which 
the initial process is repeated except that BDI reviews every state reconsid- 
eration decision and not just a sample. At the third stage a formal hearing is 
available, on a "de novo" basis, before an Administrative Law Judge (ALJ). 
Those dissatisfied with the ALJ's decision may appeal to the Appeals Council, 
which has, however, a discretionary jurisdiction. The Council can also initiate 
appeals on its own motion and decide questions certified to it by ALJs. It 
functions in two-member panels, and can change a decision on the basis of 
error or new evidence. Neither the decisions of the Administrative Law 
Judges nor the Appeals Council have precedential value. The last level of 
appeal is for a claimant to bring a suit in the federal district courts. The 
court's decisions can be appealed through the federal appellate courts by 
claimants or the government. 

A. Initial Decisions by State Agencies 

Until recently the Bureau of Disability Insurance received all the deter- 
minations made by state examining teams. The BDI examiners were allowed 
to reverse awards and to send the question back to the state agencies (SA) 
when they disagreed with a denial. BDI has replaced this system with a 
system of statistical quality control involving SA sampling and review of 
its own product and a BDI review of 5% of the SA's cases. 

In carrying out its review function each SA must take a sample of its 
cases in each month of a size specified by BDI. These cases are reviewed by 
specially trained "quality assurance" personnel in accordance with a basic 
format prescribed by BDI and any further factors the state wishes to have 
reviewed. The review has three major categories: (1) how well the case 
is documented and developed, (2) the correctness of the decision and its 
justification by application of the relevant decision rules, (3) technical 
questions, such as routing, but including claimant notification. Within each 

* The statistical quality assurance system for the Retirement and Survivors Insur- 
ance program under the Social Security Act is very similar to that used in the 
disability program and will not be separately treated. 



of these categories there is a series of questions and the reviewer is to answer 
"yes," "no" or "N/A." "No" responses are equivalent to finding an error. 

Each review question is coded and by application of the code the SA can 
cumulate review sheets into a monthly report showing the level of errors for 
each type of claim processing function. This error level can then be corre- 
lated with other coded information about the reviewed claims, e.g., race, sex, 
age and education of the claimant; claims examiner; type of claim; type of 
disability (muscular, cardiovascular, etc.) ; processing time; decision result 
and whether the decision was an initial or reconsidered decision. Properly 
interpreted these correlations will suggest areas of strength and weakness in 
the SA adjudication process and hopefully lead to program action to make 

BDI's 5% sample review follows pretty much the same format. Hence it is 
a check on the SA's performance and on the SA's quality assurance program. 
The Bureau can also use its review to produce special sorts of information 
for policy formation purposes. For example, a portion of the 5% sample are 
given an intensive review with respect to medical determinations in order to 
develop data on the incidence of agreement among physicians concerning 
physical conditions which are totally disabling. At a certain level of agree- 
ment a condition may be added to the regulatory listing of per se disabilities. 

There are currently no standards for errors which indicate a system out of 
control. The present EDI strategy is threefold: (1) let the system generate 
some data on the basis of which national operating averages can be estab- 
lished; (2) push for improvements in the below average systems and thereby 
continuously upgrade the norms; (3) get the QA personnel established in 
positions of influence in the SA's. 

The questions of policy on what data is to be collected, how the data 
generated is to be manipulated, what norms are to be set and what policy 
action taken based on the information revealed are committed to the Quality 
Assurance Council. That Council is made up of representatives of the five 
divisions within BDI. This is an entity with the dual purpose of assuring 
(1) that the QA information gets to the people who can take action and (2) 
that the control of the program does not slip into the grasp of the statisticians. 

B. Hearing Level 

There is some consistent statistical record keeping on the decisions of 
Administrative Law Judges (ALJ). The Bureau of Hearings and Appeals 
(BHA) of the Social Security Administration will know, for example, the 
work product per month of each ALJ, the rate at which he "reverses" previous 
determinations and his average time in processing cases. It can counsel the 
ALJ on methods of improving his efficiency if problems concerning produc- 
tivity and timeliness show up. The question of the quality of his product which 
may be reflected in an "abnormal" "reversal rate" are more difficult. 

Technical errors, such as failure to establish the time of the onset of dis- 
ability in an allowed claim, can be sent back to the ALJ by the Liaison and 
Survey Branch of BHA's Division of Field Operations. Where the problem 
is one of poor development or questionable judgment, review is simply by 
the appellate process within BHA at the behest of the claimant or on a 
recommendation for "own motion review" by an Appeals Council Examiner. 
These examiners supposedly have a good idea from experience about which 
ALJ's are likely to be unreliable and their product is checked more carefully. 


However, there is no stylized review as in a SQA system to produce data on 
the patterns of problems and the only feedback to the ALJ is through Appeals 
Council reversal of his decisions. 

C. Other Levels of Adjudication 

The SQA system will very shortly be made applicable to the second level 
of disability determination — decisions on reconsideration — and to decisions 
on the continuation of disability benefits. A larger sample, 8-10% of the 
decisions, will be drawn from these adjudications; BDI will continue to 
review 100% of certain types of cases in which differences of viewpoint most 
frequently occur, such as neurological and musculoskeletal cases. 

There also are plans in other bureaus of the Social Security Administration 
to institute a SQA system for the actions of district office personnel, who 
screen out some cases because of lack of the necessary attachments to the 
social security system and who aid in the development of the claim file for 
submission to the State Agency for initial decision. 

II. Veterans' Compensation and Pension Benefits 
This, the largest federal disability program, has only two administrative 
decisional stages and no court review. At the initial level in the VA regional 
office the important eligibility question — the application of the rating schedule 
and the determination of service-connection — is made by a Rating Board 
consisting of one doctor and two legal specialists. Case development work 
is done for the Rating Boards by other regional office personnel. Informal 
hearings are available. In difficult cases a VA doctor makes an examination 
and submits a report to the Board. Most claimants are represented by one 
of the veterans' service organizations, which have free offices and equipment 
in the Va building. Non-unanimous Rating Board decisions are referred to 
the supervisor. If a Rating Board wishes to allow a case not permitted under 
the rating schedule, because of exceptional circumstances, the case must be 
referred to the VA central office in Washington. 

Initial decisions can be appealed to the independent Board of Veterans' 
Appeals (BVA). When an appeal is filed, the initial level decision-makers 
review the file to prepare a statement of the case ("SOC") explaining the 
decision, and in the course of this may allow the case. The statement of the 
case is sent to the claimant, and if he fails to respond to it, the case is closed. 
Only one-half the cases in which initial appeals are filed become "formal 
appeals," largely because the applicant fails to respond to the SOC. Thus, 
this SOC process includes some of the functions performed in the reconsid- 
eration stage at other agencies. 

In cases formally appealed, BVA gives de novo consideration and an 
opportunity for oral evidentiary hearings. BVA can reverse for error or on 
the weight of the evidence, the latter basis being used in most cases. The 
Board operates in three-member panels and by unanimous vote. Non- 
unanimous cases are referred to the Chairman who can vote with the 
majority or enlarge the panel. BVA decisions do not have precedential value. 

A. Regional Office Adjudications 

There is a daily "first-line" review of the total work product of most 
adjudication units (all except those few in which there are not enough 
VA employees to insure an independent review) . A statistical sample of all 
claims on which any action (initial determination, redetermination, discon- 


tinuance, etc.) was taken by the unit on a given day is reviewed for both 
procedural and substantive correctness. The reviewer corrects any error 
found, whether it involves the particular action on a claim taken that day 
{e.g., adding a new dependent to a veteran's file) or any action taken previ- 
ously which comes to his attention (e.g., the initial determination that a 
veteran had been honorably discharged and was therefore eligible for 
benefits). He also enters the numbers and types of errors found into a 
continuing tally, which is sent at the end of each month to a computer center. 
At the center the figures are turned into a monthly report on the regional 
office; the report is then sent both to the national Office of Appraisal and 
back to the regional office. 

The Office of Appraisals monitors these monthly reports, looking for trends, 
but it does not conduct its own separate statistical review of a region's 
monthly output. Thus there is no continuing check-up on a region's quality 
control operation. On an average of once every eighteen months, however, 
the Office of Appraisal conducts an in-depth review of the total operation 
of a regional station. As part of this review, the Office conducts a random 
sampling of the station's work product, looking for the same types of errors 
that the station checked for each day. The findings in the station's monthly 
quality control reports are then checked against the results of the Central 
Office's own review. In this way the Office in effect reviews the station's 
statistical quality control ("SOC") operations. If the variations between 
results of the Office sample review and the findings expressed in the stations' 
monthly report is significant statistically, that fact becomes part of the Office's 
report on the management performance of the regional station. 

In addition, the Office sends a report to the unit on each error that it found 
in the individual cases that it reviewed during its sampling. For any "gross" 
errors affecting basic entitlement, the Office sends a detailed explanation of 
how the station went awry, plus instructions on how to correct the mistake. 

The theory behind this quality control procedure is that on a continuing 
basis quality control can best be handled in a decentralized fashion at the 
regional level; the central office needs to get into the act only periodically, to 
insure that the product of the daily regional reviews faithfully reflects the 
true performance of the stations. 

The SQC system looks at both "quantitative" and "qualitative" factors in 
the adjudication process. Quantitatively the system looks at the efficiency of 
the operation measured in terms of man hours per end product. Standards 
have been developed through experience against which performance is meas- 
ured, for example, the standard for adjudicating (that is, time spent by 
personnel in the adjudication section) an initial disability claim is 2.38 
man hours. There are also overall timeliness standards for processing various 
end products. For initial disability claims the "guidelines" are to process 50% 
within 60 days, 75% within 90 days and 98% within six months. 

The "qualitative" review looks at sample cases and evaluates them for (1) 
substantive error (errors leading to incorrect result), (2) judgment deficiency 
(errors in the development of a claim file and cases in which reviewer 
thinks a different result more tenable than the one reached) and (3) pro- 
cedural discrepancies (errors which do not affect basic entitlement). Each 
of these categories is broken down on a standard form into a series of 
subheadings and specific inquiries. The survey would seem sufficient to give 
a good "patterned" feedback on where the problems are. Although the way 


in which the questions are worded leave a fairly large area of discretion to 
the reviewer, the system is designed to force agreement on whether an error 
really existed. Each file with an error notation is sent back to the initial 
adjudicator who is required to agree or disagree with a finding of error. If 
there is disagreement, the question goes to a higher agency level for resolu- 

For each category of error (substantive, etc.) there is an established "goal" 
and an established "minimum acceptable level" of errors per 100 cases. For 
example, the goal in substantive errors by rating boards is 1.5 per 100 cases 
and the minimum acceptable level of performance is 4.0 errors per 100 cases. 

B. Adjudication by the Board of Veterans' Appeals 

There is a somewhat different quality review system at the Appeals Board 
level. The Board is divided into a number of Sections and each Section has a 
staff of attorneys who prepare initial decisions. These decisions are then 
sent for "revision" to the Section, which also evaluates the quality of the 
initial decision. This evaluation is made on a standard form which breaks 
each decision down into a set of component operations (statement of con- 
tentions, findings of fact, discussion and evaluation, etc.) and weights 
them numerically in terms of their importance. A perfect score is 100. Each 
Section can in this way develop data on the performance of its attorneys and 
give them help in areas of weakness. The same form is used by a rotating 
committee of Appeals Board members to evaluate, on a sample basis, the work 
of each Section of the Board. 

III. Civil Service Disability Retirement 

The Bureau of Retirement, Disability, and Occupational Health of the 
Civil Service Commission has three administrative decisional stages and no 
court review. Initial determinations are made, without a hearing, by Regional 
Medical Officers (who are M.D.s) on the basis of reports from the claimant's 
supervisor and personal physician. If needed, a medical examination by a 
government doctor will be ordered. In the second stage, dissatisfied claimants 
may obtain a de novo informal hearing from Civil Service Commission appeals 
examining officers. The last appellate level is the Board of Appeals and 
Review, which will accept written new evidence but does not give oral 
evidentiary hearings. The officials of the Board and the appeals examining 
officers are not doctors, and for each, disability cases are only a minor part 
of the total caseload. 

Because the initial adjudications in this system are made by a single medical 
officer working alone (save for clerical staff) in one of the six regional 
offices, there is no means for conducting an independent quality review at 
the regional office level. All sampling is done by the national office. The in- 
terest in the national office review is clearly the employee's interest. 100% 
of all denials and agency initiated claims are reviewed, while the awards are 
reviewed on a 10% sample. (Indeed until recently the regional medical officers 
had no authority to deny claims without central office approval.) 

The files selected for review are analyzed by the national office on two 
broad bases — whether the decision is substantially correct and whether the 
claim is adequately developed. If the claim was agency initiated and there- 


fore comparable to an adverse action, there is also a detailed review for 
procedural regularity. The analyst writes a narrative report of his finding 
which is sent to the Regional Medical Officer ("RMO") should the analyst 
conclude that a finding was improper. The national office cannot reverse or 
remand the case to the RMO except through the appeals process. 

Statistical analysis is currently limited to (1) the number of cases decided 
by each Regional Medical Officer and (2) the ratio of awards to denials and 
the ratio of total to partial disability findings by each RMO. The analysts also 
look for cyclical variations in an individual RMO's decisions and at the extent 
to which his denials are reversed on appeal. If a particular medical officer's 
product varies substantially from the norm, or in relation to his own pattern 
of prior performance, the agency is put on notice to inquire further into the 

A new coding system is being introduced which should allow the Bureau 
to begin to correlate types of diseases or injuries vnth claims determinations 
sometime during the next year. The Bureau is also about to publish its first 
new Handbook for Regional Medical Officers since the mid 1950s. 

IV. Federal Employees' Compensation Act 

The Office of Federal Employees' Compensation in the Department of Labor 
("OFEC") has an administrative structure similar to that of the Civil 
Service Commission in that it has three stages and no court review. Initial 
level decisions are made by lay claims examiners, however, and reconsidera- 
tions, with informal hearings, are provided by the separate Division of Hear- 
ings and Review within the OFEC central office rather than by an inde- 
pendent office. The reconsideration personnel and the ultimate appellate body, 
the Employees Compensation Appeals Board ("ECAB"), handle only FECA 
cases. The ECAB decisions are published, have precedential value and are 
circulated to the lower level decision-makers. Medical advice is given to 
decision-makers by OFEC-employed doctors. If there is a conflict between 
the medical report filed by the claimant's physician and that done by the 
government physician who examined the employee at the time of his injury, 
the case is referred to a randomly chosen private specialist for his opinion. 

The Office of Federal Employee Compensation does not use a statistical 
quality control system in the management of the Federal Employee Compen- 
sation program. OFEC does have a quite impressive list of instructions, re- 
views and delegation procedures designed to maintain a high quality product, 
however, and these management tools and appellate processes doubtless pre- 
vent many decision errors in areas where experience has shown there to be 
a potential for variance. However, one may wonder whether as the program 
grows these procedures will provide the sort of systematic information that 
is needed for eff'ective caseload management. 

The OFEC yearly audits of the ten regional offices seem to be moving in 
the direction of a uniform reporting system. The auditors have a list of 
questions to which they should address themselves in their management re- 
views and their review of a sample of case files. However, the inquiry and 
reporting of audits would have to be standardized to a much greater degree 
before they approached a point at which reliable data on trends might be 
produced or quasi-objective standards for timeliness or adjudication quality 
could be employed. There are, of course, costs in moving toward objectivity, 


but the implementation of more rigorous and uniform evaluation proce- 
dures does not require that they be substituted for the current audit proc- 
ess. Standardized and hand-tailored quality reviews may be made mutually 

V. Longshoremen and Harbor Workers Compensation Act 

Most compensation claims are settled without agency action by agreement 
between the claimant and the insurance company which provides compensation 
insurance to the worker's employer. If a dispute arises between the parties, 
the federal agency — the Office of Workmen's Compensation Programs in the 
Department of Labor ("OWCP") — through its deputy commissioners first 
acts as a mediator, scheduling informal conferences to encourage negotiations 
and settlement by the parties. Prior to the Longshoremen's and Harbor 
Workers' Compensation Act Amendments of 1972 cases in which settlement 
could not be achieved were tried at an informal evidentiary hearing before 
a deputy commissioner, with the carrier and claimant participating as 
adversaries. There was no administrative appeal from the deputy commis- 
sioner's decision ; a dissatisfied party's remedy was by review in a federal 
district court. Under the 1972 amendments and their implementing regulations 
deputy commissioners retain their mediation function at pre-hearing con- 
ferences, but hearings are now subject to the formal requirements of the 
APA and are before Administrative Law Judges. A new Benefits Review 
Board has been created to hear appeals from ALJ decisions. Final orders of 
the Benefits Review Board may be appealed to a circuit court. 

There is no statistical quality control system in the L&HWCA program. 
Again there are certain management checks on decisions which might pro- 
duce abuses, e.g., lump sum settlements, or withdrawals of claims. Records 
are kept on the efficiency and timeliness of claims examiners' processing of 
claims which go to hearing. The data collected enables OWCP to check into 
apparent problems of delay, excessive days of hearing, excessive tran- 
scripts, etc. However, hearings represent only 10% of claims processed. The 
changes in the administrative structure of this program by the admendments 
to the L&HWCA in 1972 should provide an excellent opportunity for the 
introduction of positive caseload management techniques. 

VI. Public Assistance Programs 

Public assistance programs are administered by the states. The basic 
pattern for claims determination has two levels, an initial determination by 
eligibility technicians in local welfare offices followed by a hearing at the 
request of the claimant before a hearing officer who has not been involved in 
the initial decision. In some states there is a further administrative appeal, 
usually on the record at the hearing, and/or judicial review. Issues of state 
compliance with the federal Constitution or the Social Security Act and its 
attendant regulations may sometimes be litigated in the federal courts. 

The Quality Control System employed by the Assistance Payments Ad- 
ministration (APA) in HEW for Aid to Families with Dependent Children 
(AFDC) and the Title XVI programs (OA, AB and APTD), which will be 
transferred to the Social Security Administration by January 1, 1974, has 
several features which distinguish it from SQA systems in the larger feder- 


ally administered programs like Veterans' Pensions and Compensation or 
Social Security. The basic difference is that the principal interest in quality 
control in public assistance is not the assurance of accuracy, fairness and 
timeliness in all adjudications, but rather the protection of the federal 
treasury from incorrect state-authorized payments. This interest affects the 
methodology and focus of quality control reviews and the aspects of the 
adjudication process covered. 

The QC system in public assistance is actually a state run program which 
is designed and mandated by HEW as a condition on the receipt of federal 
grant-in-aid funds. Quality control is defined as 

[A]n administrative prog'ram for determining- the extent to which those 
receiving public assistance are (1) eligible for assistance, and (2) receiv- 
ing assistance payments in the amount to which they are properly 
entitled. It is used by the state and federal governments to maintain a 
continuing and systematic control over the incidence of ineligible re- 
cipients and incorrect payments in public assistance caseloads. 

As a method of state administration, the quality control system has the 
purpose of holding the incidence of error below pre-established tolerance 
limits of errors. It accomplishes this purpose by means of three processes: 

(1) continuous review of statistically reliable statewide samples of cases; 

(2) quarterly assembly and analysis of case findings to determine in- 
cidence of errors; and (3) when tolerance limits are found to be exceeded, 
corrective action to bring the level of erroneous cases within the tolerance 

Actually this manual definition is somewhat out of date. Reports are now 
compiled every six months, but data on overpayments and improper positive 
actions must be reported monthly. 

Sample sizes for each state are specified by HEW and the state quality 
reviewers redetermine each case that shows up in the sample. Review is not 
on the record of the decision as initially made, save in the case of denials or 
terminations, because the question that is being asked in this system is 
whether the recipient is currently entitled to be on the rolls and is receiving 
a correct payment. Hence a determination of eligibility based on the absence 
of the father will not be noted as an error if the father is present but disabled 
and therefore the family is eligible. Moreover, there is no review for timeliness 
(although there are statutory and regulatory rquirements of promptness) nor 
is there a quality review of adjudications in administrative appeals ("fair 

Nevertheless, the review procedures and notations concerning initial and 
periodic redeterminations do reveal a substantial amount of information 
about the incidence and reasons for errors in initial adjudications. The re- 
viewer is instructed to check all elements of eligibility and to determine 
whether an error has been made, about what, and why an error occurred 
(three major categories: incorrect application of policy, computation or 
other technical error, or failure to take indicated action to develop facts) . 
Interestingly, errors may also be assigned to the claimant under this system 
because many determinations are made on the basis of claimant declarations 
and the recipient has a continuing obligation to report changes of status 
which affect payments or eligibility. 

The tolerance levels for error in public assistance determinations have been 
set at 3% for positive and negative eligibility errors and 5% for overpayments 
and for underpayments. In fact states constantly exceed these error rates, 
even though the ±37r sample variation allows a cumulative 28% error rate 


if nicely distributed. That no or ineffective corrective action is taken to deal 
with these errors is common knowledge. Recent regulations permit HEW to 
disallow federal matching to the extent that the states' overpayments and 
payments to ineligibles exceed the tolerance levels specified. The states have 
complained that the tolerances are too low given the complexity of the deter- 
minations and their necessary reliance on client declarations and reporting of 
changes. And, indeed some quality control reports reveal an incidence of client 
error which is above the tolerance without taking into account agency errors. 
HEW has responded to these complaints by proposing regulations which would 
permit states to check client-supplied information more carefully, to eliminate 
the self-declaration method of application currently required in some programs, 
to spend longer times validating claims and to use local rather than state hear- 
ing officers in pre-termination hearings. 



Warren F. Schwartz* 


In this report I will present my revised recommendations for 
changes in the administration of the antidumping laws.^ Since 
I submitted my initial report I have had an opportunity to dis- 
cuss my proposals at a meeting of the Committee on Ratemaking 
and Economic Regulation attended by representatives of the 
Departments of Treasury and Justice, I have received written 
comments - from the Customs Committee, Administrative Law 
Section of the American Bar Association, the Federal Trade 
Commission and George Bronz, an attorney with extensive ex- 
perience in antidumping proceedings. I have also examined the 
amendments to the antidumping laws contained in the Trade 
Bill ^ submitted by the administration. Finally, and most sig- 
nificantly, I have had extended discussions concerning my pro- 
posals with Treasury officials who administer the antidumping 

I thought it would be desirable if I were to prepare the present 
report as a complete self contained examination of the issues 
rather than as a series of extensions and revisions which would 
have to be read in conjunction with my original draft. Thus with 
the exception of a few points as to which comparison of the two 

♦ Professor, University of Virginia Law School; Consultant to Committee on Rate- 
making and Economic Regulation. 

'In my original report (pp. 24-31) I also considered administration of the laws 
authorizing the imposition of countervailing duties. The proper treatment of this 
question turns upon the resolution of a threshold policy issue of considerable difficulty 
discussed in my original report. I have decided that it is inappropriate to try to 
formulate a recommendation on this issue within the confines of the present study. 
If the Committee takes a contrary view the discussion contained in the original report 
provides an adequate basis for further consideration of the matter. 

- All of the comments are reproduced in the Appendix. 

3 "The Trade Reform Act of 1973," H.R. 6767, 93d Cong. 1st Sess., § 310 deals with 
antidumping. The bill will be cited Trade Bill § — . 



versions may be enlightening or which are more fully developed 
in the earlier version because they then seemed more significant, 
the present report may be regarded as a complete superseding 
statement of my views. 


I recommend that: 

(1) Tentative and Final Treasury Decisions (including With- 
holding of Appraisement) contain an explicit statement of 
reasons which makes manifest the issues presented and the dis- 
position made of them. 

(2) Counsel for interested parties be afforded an opportunity 
to confer with Customs' representatives prior to the completion 
of their verification of the data supplied by firms under in- 
vestigation for suspected dumping in order to be apprised of 
the methods employed by the Customs' representative to verify 
the data and the information compiled by the Customs' represent- 
ative (to the extent it is not confidential). Counsel should also 
have an opportunity to suggest additions to and refinements of 
the methods employed by the Customs' representative. Adoption 
of these suggestions would, however, be entirely discretionary 
with Customs. 

(3) The memorandum containing Customs' recommendations 
for disposition of the case transmitted to the Office of Tariff and 
Trade Affairs (with the exception of portions disclosing con- 
fidential matter) be made available to the parties. 

(4) A single agency, preferably Treasury, be assigned re- 
sponsibility for both the Less than Fair Value (LTFV) issue now 
decided by Treasury and the "injury" issue now decided by the 
Tariff Commission. 

(5) Present policy, which allows informal disposition of anti- 
dumping matters by agreement to discontinue the practice only 
when the relevant foreign price "exceeds the [American price] 
by an amount that is considered minimal in relation to the total 
volume of sales" be abandoned and informal disposition utilized 
whenever relief substantially equivalent to that obtainable in 
litigation can be secured by agreement. 

(6) Dumping findings be limited to firms as to which there is 
evidence of a significant number of sales in contravention of the 

(7) Review be available immediately after the completion of 


the Tariff Commission* proceeding and extend to the question 
whether the determination is supported by substantial evidence 
contained in the "record" before Treasury when final action was 

An Overview of the Administration 
OF THE Antidumping Laws 

The Department of the Treasury administers the laws authoriz- 
ing the impositions of antidumping duties on goods imported into 
the United States.^ These duties are designed to counteract the 
effects of international price discrimination, that is, the practice 
of foreign firms charging lower prices in the American market 
than they do abroad.^ 

Responsibility for administering these laws is shared by 
Treasury with the Tariff Commission. Treasury deals with the 
question of whether the goods are being sold at "less than . . . fair 
value" (LTFV) by which is usually meant at a lower price than 
the same goods are being sold in the country of manufacture.® 
If such a determination is made, the Tariff Commission then 
decides if the injury to domestic producers resulting from the 
sales required for the imposition of an antidumping duty has 

* Or the single agency having responsibility for all determinations if proposal num- 
ber (4) is adopted. 

' 19 U.S.C. 160 et seq. 

^ For two recent studies of the antidumping laws reflecting the divergent views 
taken of them see Barcello, Antidumping Laws as Barriers to Trade — The United 
States and the International Dumping Code, 54 Corn. L. R. 491 (1972) (urging limited 
use to counteract predatory pricing) and Fisher, The Antidumping Law of the United 
States: A Legal and Economic Analysis, 5 Law and Policy in International Business 
85 (1973) (urging extensive use against "continuous" dumping). For a collection of 
the earlier literature see Barcello, supra, 54 Corn. L. Rev. 494 n. 9. 

'The term "fair value" is not explicitly defined in the statute. However, 19 U.S.C. 
161, defining the amount of the antidumping duty, prescribes as the reference price 
"foreign market value (or in the absence of such value, then the constructed value)" 
and thus implicitly so defines "fair value." Foreign market value is in turn defined as 

"the price, at the time of exportation of such merchandise to the United States at 
which such or similar merchandise is sold or in the absence of sale offered for 
sale in the principal markets of the country from which exported ... or if not so 
sold or offered for sale for home consumption or if . . . the quantity sold for home 
consumption is so small ... as to form an inadequate basis for comparison, then 
the price at which so sold or offered for sale ... to countries other than the 
United States . . ." 

(19 U.S.C. 164). Constructed value, essentially cost, is defined in 19 U.S.C. 165. The 
reference price in the United States is either the purchase price when imported for 
the account of a person other than the exporter (defined in 19 U.S.C. 162) or the 
exporter's sales price when the exporter imports for his own account and then sells 
(defined in 19 U.S.C. 163). The contest of the less than fair value ("LTFV") standard 
is further elaborated in Sections 153.2 through 153.8 of the Customs Regulations. 
These appear in 19 CFR and were recently repromulgated in toto. See 37 F. R. 26298 
(December 9, 1972). References here will be to the regulations cited in Reg. and 


occurred.'' Review of the LTFV finding (to the Customs Court 
and Court of Customs and Patent Appeals) is available only- 
after the Tariff Commission finds injury and an antidumping 
duty is imposed upon goods entering the United States.** 

The Treasury stage of the proceeding is divided into tv^^o parts, 
an initial investigation by the Bureau of Customs and subsequent 
revievv^ by the Office of Tariff and Trade Affairs. The Customs 
phase is initiated by the submission, either by a district director 
of Customs (in fact rarely done) " or a private person, of in- 
formation indicating that a violation has occurred.^" A "summary 
investigation" is then conducted,^ ^ and if the requisite findings 
warranting further proceedings are made, a "full-scale investiga- 
tion" is initiated by the publication of an Antidumping Proceed- 
ing Notice. ^- 

A detailed questionnaire with respect to the sale of the goods 
in question in the relevant markets is then submitted to each of 
the firms included in the investigation. The information pro- 
vided in response to the questionnaire is verified by a customs 
representative (usually located overseas) who examines the books 
and records from which the data is taken, interviews persons 
with knowledge of the practices in issue and submits a report to 
Customs in Washington.'^ 

Throughout the Customs stage the person in Washington im- 
mediately in charge of the case is an oflficial known as the case 
handler. The case handler prepares and transmits the question- 
naire to the firms under investigation, instructs the Customs rep- 
resentative with respect to the verification of the data supplied 
and on occasion actually goes overseas to participate in the 

After the case handler has examined the information supplied 
by the complainant and that supplied by the firms under in- 
vestigation and verified by the customs representative he has a 
series of "disclosure conferences" with each of the interested 

■^ The Tariff Commission decides "whether an industry in the United States is 
being injured or is likely to be injured, or is prevented from being established by 
reason of the Importation of such merchandise . . ." (19 U.S.C. 160(a)). I will refer to 
the three types of effect which warrant imposition of an antidumping duty as "the 
injury requirement." 

M9 U.S.C. 169. 

» Reg. 153.25. 

'"Reg. 153 26. The information required in the notification is specified in Reg. 153.27. 

" Reg. 153.29. 

^Reg. 153.30. 

'3 Reg. 153.31 gives only a very limited indication of how the full scale investigation 
is conducted. The description in the text is based on discussions with Treasury and 
Customs officials. 


parties at which all of the accumulated data not classified as 
confidential are made available '^ and the tentative views of the 
case handler with respect to disposition of the case are com- 
municated. Frequently a party, in response to what is learned at 
the disclosure conference, submits additional data and argument. 
There are then subsequent disclosure conferences presumably 
until all parties are fully informed as to the data which have 
been assembled and the questions which are presented, and pro- 
vided an opportunity to submit facts and argument concerning 
all relevant issues. 

All of the disclosure conferences are attended by only one of 
the parties. No transcript of what transpires is maintained. No 
rules of evidence are applied. 

After the case handler has examined all the material which 
has been assembled, he drafts a detailed memorandum recom- 
mending disposition of the case. This is reviewed by supervisory 
personnel in customs and transmitted to the Office of Tariff and 
Trade Affairs in Treasury. (The memorandum is not available to 
the parties.) '•"' The entire file accompanies the recommendation. 

The ofificials in the Office of Tariff and Trade Affairs responsi- 
ble for antidumping matters review the recommendation and a 
notice of tentative disposition of the case is issued. ^*' Interested 
parties are then permitted to argue and present additional in- 
formation at a hearing presided over by the Assistant Secretary 
for Tariff and Trade Affairs or his deputy. Briefs are submitted 
after the hearing. The case handler attends the hearing and pre- 
pares the initial draft of the final determination. This draft is 
then reviewed by the Assistant Secretary and his staff and a 
final determination issued. If LTFV sales are found the case is 

'* In addition to the disclosure conference itself there is opportunity afforded to 
inspect and copy documents not treated as confidential. Provision is also made for 
disclosure in "generalized, summary or approximated form, without identifying details" 
of material granted confidential treatment. The question of access to documents is 
comprehensively treated in Reg. 153.23. 

'" I have been advised that it is now contemplated that a "non confidential summary" 
of the memorandum will be publicly available. 

19 This can take three forms. A tentative negative determination may be issued. 
(Reg. 153.33). If the firms under investigation agree to a six months period for with- 
holding of appraisement then withholding of appraisement, in effect a tentative 
affirmative decision, will precede the final determination. (Reg. 153.34(b)). This is the 
usual practice. If no such agreement is made the withholding of appraisement and the 
final determination of dumping will be issued simultaneously. (Reg. 153.34(a)(3)). In 
this case what I have designated a tentative determination is in form final. However 
the issuance of the notice of withholding of appraisement triggers a right to a hearing 
before Treasury. (Reg. 153.37). Moreover since Treasury has power to revoke the 
"final" LTFV determination at any time prior to final Tariff Commission action (Reg. 
153. 3g) the action although nominally final, is really tentative in the sense of triggering 
a Treasury proceeding which could lead to the action not being taken. 


referred to the Tariff Commission for consideration of the 
"injury" issue. If injury is found and a duty actually imposed 
review can be obtained in the Customs Court and Court of 
Customs and Patent Appeals. 

I will first consider the procedures employed to develop the 
factual record and resolve the controlling legal questions. I will 
next evaluate the present division of responsibility between 
Treasury and the Tariff Commission, the method utilized for dis- 
position without a formal determination, the coverage of the 
orders issued and finally the timing and scope of judicial review. 

The Substantive Framework 

Before addressing these issues, however, I believe it would lend 
clarity to my presentation if I were to outline my views as to 
the soundness of the substantive standard presently applied in 
antidumping cases and indicate how these views may bear on my 
conclusions with respect to the procedural issues considered. The 
LTFV requirement of the antidumping laws is satisfied solely by 
a showing of a disparity in the relationship of cost to price be- 
tween goods sold abroad and in the United States. ^'^ No distinction 
is drawn among the reasons why such a disparity may exist. ^'^ 
Consequently if a higher price in relation to cost is realized 

" I have somewhat simplified the problem in the text by assuming identity of the 
"goods" sold abroad and in the United States and that all costs incurred in the manu- 
facture and distribution of the goods are in fact taken into account. Actually there 
are two additional complications, both of which are likely to increase the reach of the 
law. First the LTFV requirement is satisfied if the discrepancy is established with 
respect not only to identical but to "similar" goods sold abroad as well. Reg. 153.9. 
The term "similar" is not defined but explicit provision is made for reducing the 
price of the "similar" goods to make "allowance . . . for differences in the mer- 
chandise." The regulation further provides that in "making these adjustments . . . 
the Secretary will be guided primarily by the effect of such differences upon the 
market value of the merchandise but, when appropriate, he may also consider differ- 
ences in cost of manufacture if it is established to his satisfaction that the amount 
of any price differential is wholly or partly due to such differences." 

The second major complication is that of defining appropriate adjustments to the 
price of the goods sold abroad to reflect manufacturing and distribution costs attribu- 
table to those goods. (Reg. 153.8.) There are many questions of judgment subsumed 
under this issue. My examination of the documentary record and conversations with 
Customs' officials moreover indicate that at least some costs attributable in an economic 
sense to the goods sold abroad are not allowed. Thus, for example, although the 
regulations and Treasury practice would permit a deduction for "technical assistance," 
provided to a purchaser to aid him in selling or servicing the goods, no deduction will 
apparently be allowed for any portion of the salary of an employee who performs 
these duties along with others. 

The reasoned elaboration of these two major issues would be perhaps the main 
substantive benefit of adopting formal hearings and decisions which reveal in mean- 
ingful detail the bases of the conclusions reached. 

^* It is generally agreed that there are a number of circumstances in which price 
discrimination is efficiency enhancing. See e.g., Alchian and Allen, Exchange and 
Production Theory in Use 416 (1969) and Lipsey and Steiner, Economics 258-63 (1972). 


abroad, no matter what the reason, the LTFV requirement is 
satisfied. As construed by the Tariff Commission, the injury re- 
quirement is also satisfied solely upon a finding that domestic 
firms by reason of the LTFV sales have suffered a substantial 
loss of sales or realized significantly lower prices on a sub- 
stantial number of sales, i'^ 

I believe, however, that at most only one type of price dis- 
crimination, that designed to eliminate competition so that 
monopoly pricing can then be used ("predatory pricing") might 
be appropriately banned.^'" My doubts as to whether even this 
practice should be made unlawful are essentially empirical. While 
it is theoretically correct that a firm could rationally incur losses 
in the short run to drive out competition and more than recoup in 
the long run by practicing monopoly pricing (until reentry in- 
duced by the high prices) the empirical evidence suggests that 
this tactic is not often likely to be successful.-^ Moreover in the 
case of international trade, where by definition the class of po- 
tential suppliers is very large, the chances of profitable predatory 

^^ I have again simplified in the text. In addition to the nature of the impact which 
is required, discussed in the text, there is also the question of the requisite casual 
relationship between the LTFV sales and the deleterious happenings in the industry. 
Recent decisions have evidenced extreme liberality in finding the statute satisfied in 
both of these respects. See e.g.. Northern Bleached Hardwood Kraft Pulp from Canada, 
T.C. Pub. 530 (1972) (finding of injury by equally divided commission); Bicycle 
Speedometers from Japan, T.C. Pub. 513 (1972) ; Large Power Transformers from France, 
Italy, Japan, Switzerland and the United Kingdom. T.C. Pub. 476 (1972) (imports 
small share of market, primary reliance on lower prices realized by domestic firms) ; 
and Instant Potato Granules from Canada, T.C. Pub. 509 (1972) (no injury but finding 
that domestic industry "likely to be injured". 

™ Barcello, note 2 supra and the Antitrust Division of the Department of Justice, 
(see Antitrust Division Submission to Treasury, June 19, 1972 p. 5), among others take 
a similar view. It is widely agreed that in any event the law as presently interpreted, 
which extends beyond the Antidumping Code negotiated under GATT auspices in 
1967, (TIAS No. 6431) and any consumer oriented economic justification so far ad- 
vanced, constitutes a significant barrier to international trade. See authorities cited 
note 2 supra. Congress has, however, expressly repudiated the GATT Antidumping 
Code agreed upon during the Kennedy Round of international trade negotiations in 
an effort to restrict enforcement of antidumping laws by the signatory countries. 
See Fulda and Schwartz, Cases and Materials on the Regulation of International Trade 
and Investment 435-444 (1970). 

I have not examined the question of whether the injury requirement should be 
construed to embody only a predatory pricing theory. Barcello, who on policy grounds 
would prefer such a view, finds the original legislative history "confused and in- 
decisive" (54 Corn. L. Rev. 559, see also 536-8, 551 n. 282). Obviously, problems of 
legislative acquiescence and the effect of Congressional rejection of the GATT code 
would have to be faced if the law were reinterpreted in this fashion. In any event 
there is no evidence of any intention to do so by the present Commission. 

'■^ I am unaware of a single documented instance in which the tactic was successfully 
employed by a firm to monopolize a market in another country. Of course, the anti- 
dumping laws have been on the books for some fifty years, and various antitrust laws 
before that, so it is impossible to rule out the possibility that but for these laws the 
tactic might have been used successfully. For recent studies casting doubt on the 
efficacy of predatory pricing see Posner, Natural Monopoly and Its Regulation, 21 Stan. 
L. Rev. 548, 587 (1969) and authorities cited therein. 


pricing seem even more remote.-- Despite these doubts, however, 
I do believe that a statute limited to predatory pricing would be 
theoretically unassailable, although perhaps not in fact worth- 
while, given the improbability that the tactic could be success- 
fully employed, and the costs of enforcement. 

The antidumping statute, as presently construed, however, 
goes beyond this conception and reaches all instances of price 
discrimination having significant impact in the American market. 
Indeed it extends to cases where substantial benefits to American 
consumers result from the practice. 

In one fundamental sense my substantive objections may be 
said to have procedural relevance. While the legislative history 
and contemporary decisions are ambiguous about the underlying 
purpose of the antidumping laws, the predatory pricing rationale 
was certainly an important one mentioned in the legislative his- 
tory and in influential theoretical writing about international 
price discrimination.-^ If the statute is viewed as based on this 

*2 A second theory is that persistent price discrimination by obscuring the "true" 
costs of goods leads to a misallocation of resources in the long run. I will not examine 
this question at length and limit myself here to two comments. First, the earlier 
writing asserted that price discrimination would somehow induce inefficient exit and 
entry by firms competing in the market where the low price was charged. (Viner, 
Dumping: A Problem in International Trade 139 (1966)). There was however no real 
theoretical or empirical demonstration of why price discrimination would necessarily 
be short lived or why competing domestic firms would not accurately assess the likeli- 
hood of the practice continuing and adjust accordingly. Nor is there any consideration 
of how government intervention can be framed to be responsive to this type of 
inefficiency — if indeed it does exist. Secondly, to the extent that the price discrimina- 
tion reflects a high price abroad resulting from government protection of the local 
industry, the harm, if it is so described, is suffered by the foreign consumers. This 
"harm" would result whatever prices were charged in the American markets. More- 
over the protection by tariff may reflect a desire to encourage the local industry 
because of benefits it confers (such as training and innovation) for which it cannot 
charge in the market. These are termed in economic analysis "positive externalities." 
If this is so the protection may be "efficient." See generally Schwartz and Harper, 
The Regulation of Subsidies Affecting International Trade, 70 Mich. L. Rev. 831 (1972). 

In any event all of this will be harmful to the American consumer of the country 
as a whole only in a very special case. Essentially, if prediction as to the pricing 
practices of the foreign firm engaging in price discrimination is particularly difficult 
for its American competitors so that inefficent exit and reentry from the industry 
result and the government could induce more efficient adjustment some form of 
intervention may be appropriate. The present law, of course, is not framed to do this. 
Nor, as is discussed in the text with respect to the predatory pricing theory, can the 
law be said to strike a good rough balance between the benefits of lower prices and 
the harm flowing from inefficient exit and reentry induced by price discrimination. 
See generally Barcello, note 2 supra 50313, Anthony, The American Response to 
Dumping from Capitalist and Socialist Economics — Substantive Premises and Re- 
structured Procedures After the 1967 GATT Code, 54 Corn. L. Rev. 159, 165-77 (1969). 

I do not say, of course, that American firms may not be hurt in the sense of losing 
sales or having to charge lower prices. I only say that the consumer gain exceeds 
the producer loss and that I am unable to see why on grounds of "fairness" the 
producer loss is different than that suffered by any other firm which is unsuccessful 
in competing with domestic or foreign rivals. 

2» Viner, note 15 supra at 26. 


theory but framed to pose the simpler questions of price dis- 
crimination and substantial impact because of the procedural 
judgment that a rule approaching per se illegality is desirable 
in light of the great likelihood of price discrimination being used 
for predatory purposes, the small loss of consumer benefits from 
a blanket condemnation and the high costs of applying a rule 
distinguishing predatory from beneficial price discrimination, I 
cannot embrace this judgment. I have concluded, however, that 
it is not my present charge to deal at length with this question. 
I do feel, however, that a fundamental reevaluation of the statute 
would be a very useful undertaking. If indeed it were concluded 
that predatory pricing were the only case worth proscribing then 
the question of whether other remedies against the practice might 
be sufficient or whether jurisdiction should be transferred to one 
of the agencies enforcing other price discrimination laws might 
also profitably be considered.-^ 

The view I take of the governing law does seem to me, however, 
inevitably relevant, to some degree at least, in resolving various 
of the procedural issues I will examine. For example, since I 
have doubts about the substantive standard, I see particularly 
great benefit in procedural change facilitating evaluation of 
decisions interpreting the law. And when the question is one of 
dealing with uncertainty as to whether the statute has been vio- 
lated, and it is possible to resolve doubts by imposing liability, 
withholding liability, or incurring the costs of gaining the data 
necessary to reduce uncertainty, my choice will necessarily be 
influenced by my appraisal of the gains and losses flowing from 

I. The Procedures Employed 

A. the present system 

The present procedures utilized to explore the factual and legal 
issues suffer from two basic and related defects. 

First, the information supplied by one party is transmitted 

"* There is presently a criminal statute proscribing dumping which has virtually 
never been enforced. Revenue Act of 1916, ch. 463, §§ 800-01, 39 Stat. 798, 15 U.S.C. 
§§ 71-72 (1970). The Robinson -Pa tman Act (15 U.S.C. 13a) administered by the De- 
partment of Justice and Federal Trade Commission deals with price discrimination. 
Also various treaties ban "business practices which restrain competition" so that 
diplomatic means to induce the foreign government to move against the practice also 
exist. See Fulda and Schwartz, note 20 supra at 102. The Federal Trade Commission 
has, however, submitted comments indicating a lack of interest in undertaking ad- 
ministration of the antidumping laws. 


informally without an opportunity provided to an adversary party 
to cross-examine persons having direct knowledge of the facts or 
examine relevant documents to verify the correctness of the data. 
Consequently principal reliance must be placed on the diligence 
and skill of Customs' personnel (prodded of course by the sug- 
gestions of adversary parties) in verifying the accuracy of the 
information upon which the determination is based. 

Secondly, parties wishing to respond precisely to the issues 
upon which the case will turn are dependent upon the informal 
discussions at the disclosure conference. The published determina- 
tions are very general and do not really delineate the issues. ^^ At 
no stage are the issues precisely stated and the tentative resolu- 
tion of them explained in an authoritative formulation upon 
which counsel for the litigants can focus. Such a formulation 
would be useful in three ways: (1) in preparing argument and 
the presentation of data at the Treasury stage, (2) in pursuing 
judicial review and (3) in future decisionmaking by other firms 
seeking to ascertain the content of the law in order to comply 
with it. 


My recommendation stresses improvement in the explicitness 
of the decisions rendered to facilitate responsive, informed pres- 

** I thought it might be useful to quote the full text of the substantive portions of 
a decision in a case which I ascertained from examining the file and interviewing 
Custom's personnel to be an extremely complicated one: 

"I hereby determine that for the reasons stated below, television receiving sets, 
monochrome and color, from Japan are being, or likely to be, sold at less than fair 
value within the meaning of section 201(a) of the Act. 

Statement of Reasons On Which This Determination Is Based: 

The information currently before the Bureau reveals that the appropriate 
basis of comparison is between purchase price or exporter's sales price and adjusted 
home market price. 

Purchase price was calculated on the basis of f.o.b. or f.o.r. packed prices with 
deductions for freight, packing, and other charges as applicable. The applicable 
Japanese commodity tax was added to this price. 

Exporter's sales prices was calculated by deducting from the resale prices of the 
related firms to distributors in the United States any applicable discounts to arrive 
at a net selling price. From the latter, appropriate deductions were made for 
inland freight in Japan, ocean freight and insurance. United States duty, broker- 
age charges. United States freight, warranty costs, packing, and commissions and 
other selling expenses incurred in the United States. To this additions were made 
for any applicable Japanese commodity tax refunded or not paid upon exporta- 
tion of the merchandise. 

Home market price was based on the delivered price to distributors in the 
home market. Appropriate deductions were made for discounts and rebates 
granted for cash, quantities, and certain sales promotions. From the net price 
adjustments were made for commissions, warranty and installation costs, inland 
freight, inland insurance, patent fees, bad debts, where applicable, and packing. 
Adjustment were also made for differences in the merchandise, and for differences 
in advertising and credit costs. 

Purchase prices or exporter's sales prices were lower than home market prices 
by amounts that were more than minimal in relation to the total volume of 

(Television Receiving Sets, Monochrome and Color, from Japan 35 F.R. 18549 (1970). 


entation by counsel for the parties. I do offer some suggestions 
for improving the procedures utilized to assemble the facts but 
stop short of proposing a formal adjudicatory hearing with the 
opportunity to cross examine and other attendant procedural 
safeguards. Before turning to my specific proposals I shall try to 
explain my reasons for rejecting a formal hearing procedure. 

The increased costs of a formal hearing would fall largely on 
the foreign firms under investigation for suspected dumping. 
Their personnel would have to testify with respect to the relevant 
practices. They would have to assemble the books and records to 
be offered in evidence and made available for inspection by an 
adversary party. While these costs could be minimized by de- 
vices such as holding the hearings overseas where the knowl- 
edgeable personnel are located and regulating the discovery and 
inspection of documents to avoid harassment, a substantial in- 
crease in cost to the exporter above that incurred under existing 
procedures appears unavoidable. 

There would in addition be large "psychic costs." Having a 
firm's books inspected and a firm's employees cross examined by 
an adverse party from another country (who is almost certainly 
a competitor) is likely to pose a very substantial threat of com- 
petitive injury. It is true that much of this danger can in fact 
be avoided by confidential treatment of material whose disclosure 
would cause competitive injury. ^^ Nevertheless, the risks of in- 
jury from extended adversary proceedings as perceived by a 
foreign firm, unfamiliar with American methods of law enforce- 
ment and fearful of favoritism to American nationals, may be 
very great. 

These various additional costs will have a deterrent effect on 
the decisions by foreign firms whether to engage in price dis- 
crimination. The more burdensome the procedure the greater will 
be the incidence of foreign firms foregoing the sales in the United 
States which they can make only by selling at a lower price here. 

Such a deterrent impact can be justified only if it is outweighed 
by the value of the improvement in accuracy resulting from the 
added expenditure. Here whatever gain in accuracy does occur 

^ The close relationship of confidential and non-confidential information in pro- 
ceedings of this kind would also render very costly the process of segregating the two 
classes and holding hearings limited to non-confidential matters. For example Reg. 
153.23(c) (2) provides that "price information" will ordinarily be disclosed but that 
the "names of particular customers or the price or prices at which particular sales 
were made" will be kept confidential. A hearing dealing with the pricing practices of 
a firm suspected of dumping would be plagued with the necessity of appropriately 
categorizing evidence within these regulations. 


will be manifested primarily in fewer instances of what was in 
fact dumping being improperly exonerated rather than in fewer 
instances of what was not in fact dumping being improperly 
held unlawful. For it is principally the data supplied by the 
foreign firm which is subjected to less searching verification 
under present procedures than would be the case in a formal 
adjudicatory hearing.^'^ 

How these costs and benefits are to be weighed cannot be wholly 
disassociated from the view taken of the merits. If one believes, 
as I do, that the benefits to American consumers in receiving 
goods they want at low prices are immediate and substantial and 
the detriment from price discrimination, in all but a very limited 
class of cases, uncertain and insubstantial, one will reject a pro- 
cedure increasing the costliness to foreign concerns of antidump- 
ing proceedings unless the expected increase in accuracy is very 
great. If you believe that the harm flowing from price discrimina- 
tion is greater or the benefits less, then a larger litigation ex- 
penditure is appropriate. I do believe, however, that even if a 
view essentially favorable to the present antidumping laws is 
taken that the benefits in increased accuracy which would result 
from formal adversary hearing procedures are not worth the costs 
involved. The present procedures offer substantial assurance of 
accuracy. The proposals I make will, at only slightly greater cost, 
further improve the process by providing additional opportunity 
for counsel to test the legal and factual premises upon which the 
determinations are based. The procedure as thus improved seems 
to me to strike a sensible balance in assuring accuracy at reason- 
able cost.28 

" To some degree data supplied by competitors seeking to establish that dumping 
has occurred would also be subject to more searching inquiry. For example evidence 
as to functional differences or consumer perception of goods when the issue is 
appropriate treatment when identical goods are not sold here and abroad could be 
more effectively challenged by firms under investigation for suspected dumping. 

28 1 have also rejected the idea of requiring that all parties be permitted to attend 
disclosure conferences and a transcript made of the proceedings. It is true that there 
is a risk that factual and legal assertions made at the conference may be influential 
but still never manifest themselves in a way that allows an adversary party to refute 
them. The problem, however, is that to a considerable extent the disclosure conference 
is devoted to a consideration of confidential matters. If all parties were allowed to 
attend, the conference would have to be limited to non-confidential matters and a 
second conference held about confidential matters. Since it is often necessary to 
examine confidential and non-confidential information relating to the same issue the 
separate conferences would introduce substantial inefficiency. Moreover since some 
discussion out of the presence of adversary parties is unavoidable the risk of ex parte 
assertions not subject to prompt refutation cannot in any event be wholly eliminated. 
Finally if, as I suggest, the determinations are made more detailed the risk of ex parte 
assertions influencing the decision but not being subject to refutation is decreased. 



1. More Explicit Determinations 

The single most important proposal I make is that the tentative 
determinations which precede the adversary stage before the 
Office of Tariff and Trade Affairs and the final determinations be 
made explicit and detailed so as to reveal what matters are at 
issue and how they have been resolved.-*^ As indicated above this 
change would be beneficial in three ways. Most significantly, 
parties seeking to persuade the Office of Tariff and Trade Affairs 
that the disposition of the case tentatively adopted after a pre- 
liminary review of the Customs recommendation is erroneous 
would be greatly aided if they could focus on a reasoned presen- 
tation of the proposed decision which revealed the factual and 
legal premises upon which it was based. In addition, judicial re- 
view would be facilitated by an explict statement of reasons in 
the final determination. Finally persons seeking to determine the 
content of the antidumping laws in order to comply with them 
would have the benefit of revealing precedent. 

The two principal issues in antidumping cases are appropriate 
adjustments in the price charged for the goods in either market 
to reflect differences in "circumstances of sale" and in the nature 
of the goods sold in the respective markets when identical goods 
are not sold in both. These matters are covered in regulations 
which raise numerous difficult issues of interpretation. These 
issues are rendered even more difficult by the necessity of apply- 
ing the regulations to the wide variety of circumstances encoun- 
tered in dealing with practices occurring throughout the world. 

At the present time the determinations are extremely general 
and give virtually no guidance as to how these issues have been 
resolved. Counsel are essentially dependent upon the informal ex- 
planations given at the disclosure conference. An appellate court 
has no authoritative document articulating the bases of the de- 
termination. Persons researching the antidumping laws are 
essentially unable to find useful precedent — except through in- 

™ As indicated above, the tentative determination would be either a tentative negative 
determination, a notice of withholding appraisement, or a notice of withholding 
appraisement accompanied by what is purportedly a final affirmative determination — 
but one subject to revocation prior to Tariff Commission action. (See n. 16, supra.) 
My recommendation extends to all of these. At the present time the Notice of Tenta- 
tive Negative Determination (Reg. 153.33(a)), the final Affirmative Determination 
(Reg. 153.35) and tentative order revoking or modifying a final determination (Reg. 
153.41) are required to include a statement of reasons. A similar requirement is im- 
posed by statute upon final determinations. (19 U.S.C. 160(c)). Present practice may 
well not satisfy these requirements. 


formal conversations with Customs' personnel as to what has in 
fact been done. 

The change I propose would entail very little additional cost. 
The matters which would be included in the published determi- 
nations already exist in the Customs' memorandum of recom- 
mendation and other internal documents. The added expense is 
limited to the preparation of an explicit publicly available 

The Treasury officials to whom I have spoken indicate that the 
possibility of changing the present practice to provide more ex- 
plicit decisions is under consideration at the present time.^^ They 
acknowledge the likelihood that beneficial changes can be adopted. 
As I have indicated above, this relatively simple and inexpensive 
proposal is in my judgment the most useful innovation in Treas- 
ury practice which can be introduced. 

2, Disclosure Conference with the Customs Representative 

It is the customs representative stationed overseas who veri- 
fies the data supplied by the exporter by examining the books 
and records from which the information is taken and interview- 
ing knowledgeable personnel. Some gain in accuracy would no 
doubt be achieved if domestic competitors interested in having an 
antidumping duty imposed were afforded an opportunity to in- 
spect the relevant records and cross examine the knowledgeable 
personnel of the exporter and the customs representative. Never- 
theless, for the reasons indicated above I reject such procedures 
as unduly costly. It does seem, however that, in light of the great 
reliance which must be placed on the customs representative if 
adversary proceedings with respect to the data he assembles con- 
tinue to be substantially curtailed, an opportunity should be 
afforded to interested parties to meet with the customs represent- 
ative prior to the completion of his investigation. At that time 
he could informally disclose the methods he has employed to 
verify the data supplied and his tentative conclusions with re- 
spect to the facts. Counsel for the interested domestic firm could 
then propose extensions or refinements in the methods employed 
to verify the data. I see no way to avoid leaving to the unreview- 

*> The administration bill also reflects an acceptance of the need for more explicit 
determinations. The bill replaces the present "statement of reasons" requirement (19 
U.S.C. 160(0)) with the apparently more demanding obligations to include in all final 
determinations "a statement of findings and conclusions and the reasons or bases 
therefor, on all the material issues of fact or law presented on the record" (Trade 
Bill § 310(b)(3)). 


able discretion of the customs representative and the Customs 
personnel in Washington the question of adopting the additional 
methods of verification which are proposed. This is a question 
which turns inevitably on judgments as to the allocation of scarce 
enforcement resources and the benefits to be gained from the ad- 
ditional inquiry which cannot be policed by outside agencies. 

I do not believe, however, that the fact that adoption of the 
propsals advanced by counsel for the domestic firm is discretion- 
ary with Customs will render the procedure unproductive. Cus- 
toms is committed in principal to conducting an objective in- 
vestigation rather than prosecuting or defending the claim of 
dumping. The customs representative if he is properly performing 
his job will be responsive to sound suggestions for improvement 
in the methods employed. 

The occurrence of such disclosure conferences will not in any 
event be commonplace. The conferences will often be held over- 
seas and involve substantial expense to the firm having a repre- 
sentative participate. They will be held presumably only in 
economically important cases where the large expense appears 
justified. And if, as I suspect, complexity and economic sig- 
nificance tend to be found together these will be "hard" cases in 
which the customs representatives are likely to be tentative in 
their own views and therefore receptive to suggestion. 

3. Access to Customs' Recommendations 

The memorandum setting forth the recommendation of Cus- 
toms for disposition of the case contains a detailed discussion of 
the factual and legal issues. A party having access to this memo- 
randum would obviously be in a better position to formulate his 
presentation to the Office of Tariff and Trade Affairs. Discrepan- 
cies between the tentative decision (which, as indicated above, is 
issued before the hearing conducted by the Office of Tariff and 
Trade Affairs) and the Customs' recommendation would be par- 
ticularly revealing in indicating what issues are crucial to the 

As far as I know the only argument against this proposal is 
that a subordinate will be fearful of advancing a position con- 
trary to one he anticipates will be taken by his superior if he 
knows that the disagreement will be known publicly. This result 
is supposed to arise in turn because the superior would be em- 
barrassed by the disagreement and the subordinate desirous of 
avoiding unpleasantness for the superior — presumably because 


of the influence the superior can exercise over his career, or for 
whatever other reasons may motivate the subordinate to spare 
his superior. 

Although I claim no expertise as a psychologist or close ob- 
server of the behavior of government officials, my own view, for 
what it's worth, is that this argument is not based upon an ac- 
curate conception of how responsible officials behave — at least 
in the administration of the antidumping laws. The issues in- 
volved are complex and subject to different resolution by reason- 
able persons. I do not believe that a discrepancy between the 
Customs' recommendation and the final Treasury decision will 
cause the officials of the Office of Tariff and Trade Affairs any 
great concern. Nor do I believe, particularly when it is understood 
that the memorandum will be a public document expressing only 
the view of Customs, that the personnel in Customs will be in- 
hibited in dealing with cases in accordance with their judgment 
of the merits by fear of displeasing their superiors. 

There is, moreover, additional reason in this situation to favor 
disclosure. I have decided, on the basis of the practical considera- 
tions discussed above, not to recommend a great extension of the 
adversary nature of these proceedings at the stage at which the 
facts are being assembled and tentative legal views formulated. 
In doing so I have inevitably had to increase the reliance placed 
upon the ability of counsel to test, after the investigation is com- 
pleted, the conclusions which have been drawn by the officials 
administering the law. For the information will continue to be 
gathered in a fashion substantially immune from the usual pro- 
cedural safeguards of an adjudicatory hearing. Consequently a 
measure, such as public disclosure of the Customs' recommenda- 
tion, which enhances the ability of counsel to assure that these 
conclusions are sound, is of particular value because of the great 
importance assigned to adversary presentation at the later stage 
when it becomes the predominant mode of procedure.^^ 

II. The Division of Responsibility 

The present division of responsibility between Treasury and the 
Tariff Commission was established in 1954.^2 Prior to that time 
Treasury had jurisdiction with respect to both the LTFV and 
injury issues. The reason for the change was the supposed ex- 

^ The Administration bill places great emphasis on the adversary proceeding before 
the Office of Tariff and Trade Affairs. It makes the holding of the hearing mandatory, 
grants standing of right to all domestic competitors, and to others on a showing of 
good cause and requires that a transcript be maintained. Trade Bill § 310(b). 

accustoms Simplification Act of 1954, 68 Stat. 1138, 19 U.S.C. § 160 (1970). 


pertise of the Tariff Commission in deciding injury questions.^^ 
Apparently no attention was given to the question of the in- 
efficiency which might be introduced by the division of responsi- 

The principal thrust of my recommendation is not that I prefer 
either the Tariff Commission or Treasury as the competent 
agency but rather that greater efficiency would be achieved if a 
single agency had jurisdiction over all relevant questions. This 
is so for essentially two reasons. First, it may appear, either at 
the initial stage of consideration or during the full scale in- 
vestigation, that there is a substantial doubt whether the requisite 
injury has occurred. If it also seems that the inquiry necessary 
to decide if such injury has in fact occurred is substantially less 
extensive than is required for the LTFV issue it would be efficient 
to concentrate initially on the injury issue. In the event that it is 
determined that there has been no injury the LTFV issue need 
not be litigated. 

Two factors suggest that this may often be the case. First, 
instances in which Treasury has found sales at LTFV but the 
Tariff Commission determined that there has been no injury 
have been extremely common, even during the recent period in 
which Treasury has applied an extremely liberal standard of 
injury.^^ Secondly, the factual complexity of many of the recent 

ssSee S. Rep. No. 2326, 83d Cong., 2d Sess. 2 (1954), and Hearings on H.R. 9476 
Before the House Ways and Means Committee, 83d Con., 2d Sess., 39-41 (1954). 

^ During the years 1972 and 1973 the following determinations of no injury by the 
Tariff Commission have been made: 

Hand Pallet Trucks from France, TC Pub. No. 498, July 1972 

Welded Wire Mesh from Belgium, TC Pub. No. 497, July 1972 

Pentaerythritol from Japan, TC Pub. No. 508, September 1972 

Cast-Iron Soil-Pipe Fittings from Poland, TC Pub. No. 515, September 1972 

Wood and Polyester/Wool Worsted Fabrics from Japan, TC Pub. No. 523, November 

Base Metal Parts for Incandescent Illuminating Articles, Suitable for Residential Use, 

from Canada, TC Pub. No. 525, December 1972 
Kraft Wrapping Paper from Canada, TC Pub. No. 527, December 1972 
Perchlorethylene from Italy, Japan and France, TC Pub. No. 531, December 1972 
Color Television Picture Tubes from Japan, TC Pub. No. 529, December 1972 
Kanekalon Wigs from Hong Kong, TC Pub. No. 534, December 1972 
Collapsible Baby Strollers from Japan, TC Pub. No. 556, March 1973 
Manual Hoists from Luxembourg, TC Pub. No. 560, March 1973 
Impression Fabric of Manmade Fiber from Japan, TC Pub. No. 577, May 1973 
Ceramic Glazed Wall Tile from the Philippines, TC Pub. No. 599, August 1973 
Aluminum Ingot from Canada, TC Pub. No. 602, August 1973 
Deformed Concrete Reinforcing Bars of Non-Alloy Steel from Mexico, TC Pub. No. 

605, August 1973. 
Electronic Color Separating or Sorting Machines from the United Kingdom, TC Pub. 

No. 609, September 1973 
Sixteen affirmative injury determinations were made during the same period. In one 
case. Fishnets and Netting of Manmade Fiber from Japan, TC Pub. 477, April 1972, 
the Commission reached an affirmative finding of injury as to fish netting but made 
a negative injury determination on fish nets. 


Treasury determinations indicate that the litigation of the LTFV 
question may easily be as or more complicated and therefore 
costly than the injury determination. For under recent injury 
decisions all that needs to be decided is that there has been sub- 
stantial loss of sales or decrease in the prices realized by domestic 
producers by reason of the LTFV sales. On the other hand, under 
the LTFV question two principal types of complex issues must 
be resolved. First, it must be decided which costs incurred by the 
foreign concern may be deducted from the price realized abroad 
in making the relevant comparison. This issue often leads to an 
extensive examination of the structure and prevailing distribu- 
tional practices of the foreign and domestic markets. Moreover, 
complex issues as to the appropriate economic and accounting 
treatment or various expense items must also be resolved. The 
second principal type of question arises when identical goods are 
not sold abroad. It then becomes necessary to compare the goods 
sold abroad and those sold in the United States from the point 
of view of the value consumers place upon them and the cost 
of producing them. This too can raise extremely complicated 

Under present law. Treasury has only very limited authority to 
dispose of a case on the ground that there has been no injury. 
At the preliminary stage there is a requirement that "some evi- 
dence" of injury be found. This is taken to be no more than data 
suggesting that some American firms have lost sales or realized 
lower prices. No real attention is apparently given to the ques- 
tion of how substantial these sales are when measured against 
the total output of the firms involved or the industry as a whole. 
Nor is there any exploration of the factors other than LTFV 
sales which may have resulted in the domestic firms suffering 
economic loss. At the conclusion of the proceeding, Treasury is 
required to make no greater finding of injury than was necessary 
in order to institute a full scale investigation. I am informally 
advised, moreover, by one of the customs' officials, that in fact no 
attention at all is paid to the injury question once the full in- 
vestigation has begun. Thus many cases which would be efficiently 
disposed of by a prompt and reasonably complete inquiry into the 
injury question are instead extensively litigated before Treasury 

■''' For example, in the transformer case all equipment was made to order. Ultimately 
the comparison was made essentially on the basis of dry weight. This is turn raised 
a host of subsidiary issues as to which features required an adjustment in applying 
the dry weight measure and which were already reflected in the relationship of weight 
to value. 

See Brief of Westinghouse Electric Corporation filed with Treasury on November 23, 
1971, p. 18. 


on the LTFV issue only to be dismissed by the Tariff Commission 
on the ground that there has been no injury. 

The second respect in which it would be efficient to have a 
single agency responsible for all issues relates to the substantial 
factual overlap between the two questions. To begin with, it is not 
possible to find whether there have been LTFV sales without 
gaining some idea of how extensive the practice has been. Beyond 
this, however, in the course of determining such questions as 
whether a price comparison is appropriate or whether certain 
items of cost should be allowed as deductions from the price 
charged abroad, it is necessary for Treasury to make an extensive 
inquiry into the structure and prevailing methods of doing busi- 
ness in the industry concerned. The fruits of this inquiry are 
obviously germane to the injury issue. 

An additional benefit which would be derived from a unified 
procedure is that of avoiding the detriment of provisional relief 
in cases in which it is ultimately determined that there has been 
no unlawful dumping. Withholding of appraisement is the formal 
action which subjects all subsequent entries to antidumping duties 
if the requisite LTFV and injury findings are thereafter made. 
After the witholding of appraisement order issues the exporter 
must post a bond to cover subsequently imposed antidumping 
duties if he wishes to clear customs and sell the goods. The amount 
of the liability is, of course, uncertain. The effect of withholding 
appraisement then is to impose immediate substantial costs on 
the foreign firm. Treasury practice, in accordance with the inter- 
national consensus stated in the GATT antidumping code,^^ re- 
quires a finding of injury before an order withholding appraise- 
ment can be issued. In fact, however, Treasury consideration of 
the injury isssue is extremely limited. This is partly a result of 
the present division of authority. Treasury, which does not have 
principal responsibility for the injury question, can be expected 
to devote fewer resources to its determination and bring lesser 
expertise to bear than if it did have primary responsibility. The 
unjustified deterrent consequence of frequent withholding of ap- 
praisement where no injury is in fact present can be of sub- 
stantial importance. 

The division of responsibility can only be justified if the bene- 
fits which can be derived by economizing the litigation effort by 

* For a discussion of how Treasury procedures were altered to comply with the GATT 
code, in particular the requirement of an injury finding before the issuance of a 
withholding of appraisement order see Anthony, The American Response to Dumping 
from Capitalist and Socialist Economies — Substantive Premises and Restructured Pro- 
cedures after the 1967 GATT Code, 54 Com. L. Rev. 159, 188 (1969). 


sometimes initially focusing on the injury issue and disposing of 
the case without passing on the LTFV issue, always avoiding the 
cost of twice presenting evidence relevant both to the LTFV and 
injury issue and avoiding unwarranted withholding of appraise- 
ment are outweighed by advantages offered by the present ar- 
rangement. These would have to be based on the conclusion that 
Treasury is so superior to the Tariff Commission in dealing with 
the LTFV question and the Tariff Commission so superior to the 
Treasury in dealing with the injury question that the loss from 
taking either function and transferring it to the other would 
exceed the gain of a single unified procedure. I do not believe that 
this is so. 

I will not try to evaluate the quality of the two agencies. I do 
submit, however, that there is nothing about either the LTFV 
issue or the injury issue which requires an expertise that either 
Treasury or the Tariff Commission does not have or at least 
couldn't readily develop. The LTFV question is a technical one 
of price discrimination which is decided by the FTC and the 
Courts under various other laws. I know of no reason why a 
knowledge of customs practices or any of the other matters 
within the jurisdiction of the Treasury Department is required 
to decide if price discrimination has occurred. Thus the Tariff 
Commission is competent to deal with this question. 

Nor do I believe that to any great degree special Tariff Com- 
mission expertise is required to decide the injury issue. The issue 
has become so simplified that matters such as the assessment of 
long range consequences to the competitive strength of domestic 
industry or the costliness of changing to alternative activities by 
firms displaced by foreign competition, as to which the Tariff 
Commission might claim some special competence, play no part in 
the decision. The one remaining area of arguable expertise may 
be in deciding which of several factors were responsible for the 
loss of sales or decrease in revenues. The Tariff Commission does 
decide similar questions in relief clause and adjustment assist- 
ance proceedings.^'^ 

I do not believe, in balance, that the benefits of specialization 
outweigh those of a unified proceeding. Although I have no really 
confident judgment, I am also inclined to believe that both issues 
should be assigned to Treasury. Treasury includes the existing 
customs agencies which generate much of the information re- 

" See generally Fulda and Schwartz, Cases and Materials on the Regulation of 
International Trade and Investment 395-421 and Fulda, Adjustment to Hardship 
Caused by Imports: The New Decision of the Tariff Commission and the Need for 
Legislative Clarification, 70 Mich. L, Rev. 791 (1972). 


quired in antidumping proceedings. Moreover, after the injury 
finding, the matter is returned to Treasury for implementation of 
the decision. Treasury must therefore in any case keep abreast of 
developments in the industry. 

The reason why my judgment is tentative is that it is not obvi- 
ous to me why, if all questions were assigned to the Tariff Com- 
mission, appropriate means of communuication between Customs 
and the Tariff Commission could not be devised. It does seem 
likely, however, that more efficiency can be achieved within a 
single department embracing all the agencies participating in the 
processing of the case. As indicated above, however, my principal 
recommendation is for a single agency dealing with all the rele- 
vant issues. No doubt the Tariff Commission, Treasury or indeed 
the Federal Trade Commission, which enforces similar price dis- 
crimination laws, could develop suitable machinery to assume 
exclusive responsibility for antidumping cases. 

III. Other Procedural Issues Within Treasury 


One method commonly employed to dispose of dumping cases is 
to have the exporter agree to discontinue the practice and avoid 
litigation of the entire controversy .''^ In mid-1970 Treasury in- 
troduced a substantial change in policy with respect to disposing 
of cases in this fashion. ^^ Purportedly to avdid "hit and run 

3«Reg. 153.15. 

^ The policy discussed in the text is not reflected in the regulations which require 
only a determination that "price revisions have been made which eliminate the likeli- 
hood of sales at less than fair value and that there is no likelihood of resumption . . . 
or . . . [s]ales to the United States have terminated and will not be resumed. . . ." 
I was informally advised by a customs' official that the reason why the policy with 
respect to the substantiality of the margins and sales was not included in the regula- 
tions was a desire to demonstrate dramatically the intensified level of enforcement 
and then gradually relax the policy as its impact resulted in a decreased incidence of 
dumping. The change in Treasury policy is discussed in Treasury Press Release May 
26, 1970 (statement of Assistant Secretary Rossides) and T.D. 70-127. See also Hearings 
on Tariff and Trade Proposals Before House Comm. on Ways and Means, 91st Cong. 
2d Sess. 522 (1970) (remarks of Eugene Rossides). 

There has been much criticism in the comments submitted when the present rule 
was under consideration of the extensiveness and unlimited duration of the reporting 
requirements imposed on firms who give price assurances as well as the ability of 
Treasury to immediately withhold appraisement if the proceeding is reopened. If I 
assume that the antidumping laws are substantively sound I am unable to join this 
criticism. While the reporting requirements are ardous, all of the data called for 
appears to be relevant. Nor do I find an immediate withholding of appraisement un- 
reasonable if Treasury believes that tliere are "reasonable grounds to believe or 
suspect" that the practice has been resumed. I do not know either any way to 
generalize about how long the reporting should continue. Reg. 153.15(h) does con- 
template final termination in the discretion of the Secretary in which case no further 
reports would be required and the other provisions authorizing reopening would also 
cease to apply. It might be desirable to state with precision the criteria for final 
termination which are now only that the Secretary concludes that it is "appropriate" 
to do so. 


dumping" it was decided that price assurances would be accepted 
only when the relevant foreign price "exceeds the [American 
price] by an amount that is considered minimal in relation to the 
total volume of sales." *^ 

Treasury, in its announcement, does not spell out its theory of 
avoiding "hit and run" dumping. My conclusion is that the effect 
on such a practice and indeed on the amount of dumping generally 
of the policy adopted would be very small. Moreover I believe that 
the policy is, in balance, inefficient. 

It should be appreciated that, in any event, goods "dumped" 
prior to the issuance of the notice of withholding appraisement 
will not be subject to a dumping duty.*^ Thus the only way that 
the present change can matter is if for some reason a notice of 
withholding appraisement can be issued more quickly than an 
agreement to discontinue the practice can be secured. But there is 
every indication that the opposite is true. The notice of with- 
holding appraisement can only be issued after a preliminary find- 
ing of LTFV sales and injury."*- The price assurance agreement 
can, of course, be obtained at any time. It is moreover question- 
able whether the hit and run dumping referred to is very likely 
in any case. Certainly it is the least deleterious to American in- 
terests. For once a proceeding is instituted, the foreign exporter 
and his domestic (and foreign) competitors know that there is 
a substantial likelihood that he will not be permitted to continue 
the practice — effectively from the time the withholding of ap- 
praisement order is issued. Predatory pricing or any other tactic 
premised upon competitors withdrawing from the field are thus 
precluded by the public knowledge that the tactic is likely to be 
short lived. Thus the maximum impact of such a practice is a 
short run diversion of sales from American producers and pos- 
sible lowering of the prevailing price in the American market. 
This impact of course redounds directly to the benefit of Ameri- 
can consumers. And none of the long run impairment of the 
vitality of the American industry, which provides much of the 
justification for the laws, will occur. 

*°T.T>. 70-127. This formula is explained as follows: 

"For example, in a situation in which home market price exceeded purchase 
price by a margin of 50 percent in only 1 or 2 sales out of a total of 1,000 sales to 
the United States, an offer of price assurances might well be accepted. On the 
other hand, in a situation in which home market price exceeded purchase price 
by 4 percent in 800 of 1,000 sales ... an offer of price assurance might well be 
rejected." Id. 
*i Although the withholding of appraisement could be made retroactive to goods 
"entered not more than one hundred and twenty days before the question of dumping 
has been presented" (U.S.C. § 160(b)) this is not usually done. In any event a similar 
retroactivity could be included in the settlement arrangements if this were regarded 
as vital. 
«Reg. 153.34. 


Thus the beneficial consequences of the change seem to me much 
more modest than Treasury suggests. I have been able to isolate 
only two respects in which the new policy will have an impact on 
the decision whether to "dump." First, the issuance of a formal 
dumping order, which of course would include a finding of injury 
to an American industry, might serve to publicize the fact of 
wrongdoing and thus have an adverse impact on the reputation 
of the firms involved. Secondly, if subsequent dumping is con- 
templated, the law can be invoked somewhat more expeditiously 
if there has been a previous finding of dumping than if the firm 
has simply given price assurances. For if there has been a dump- 
ing finding and the practice is resumed, an antidumping duty can 
be imposed by customs on entry of the goods without further 
proceedings. If, however, price assurances have been given and 
are violated, the proceeding must be reopened and final LTFV and 
injury findings made before the duty can be imposed. 

Under the regulations, however, the practical effect of this 
difference has been substantially diminished. First, the extensive 
reporting requirements imposed as a condition for the disposition 
of a case on the basis of price assurances facilitate monitoring 
the firm's activities to assure that it remains in compliance. 
Secondly, if it is determined that there are "reasonable grounds" 
to believe that the dumping has been resumed, a withholding of 
appraisement notice can immediately be issued and the proceeding 
reopened. As a result all goods entering after the reopening of the 
proceeding are subject to the duty ultimately imposed. 

The question is whether the benefits in slightly increased de- 
terrent effect and more expeditious proceedings if the practice is 
resumed outweigh the detriment of engaging in the remainder of 
the LTFV proceeding and the entire injury proceeding in circum- 
stances where the exporter is prepared to agree to discontinue the 

I believe that, in balance, the change in policy is plainly detri- 
mental. It will, moreover, constitute an even greater deterrent to 
price discrimination by foreign concerns which is beneficial to 
American consumers and indeed may provide the only means for 
the foreign concerns to enter the American market. Again, of 
course, the view taken of this matter is inevitably influenced by 
the assumed appraisal of the policy underlying the statute. But 
even if I were to endorse enthusiastically the full reach of the 
present law, I would conclude that the new severe policy with 


respect to disposition of these cases by agreement of the exporter 
is plainly unwise. 


The regulations provide that the proceeding may extend to "all 
shipments of the merchandise in question from an exporting 
country, or only to shipments by certain persons or firms." '*^ A 
similar choice is specified for the notice of withholding of ap- 
praisement^'* and the final determination.*^ The regulations do 
not, however, indicate the criteria applied in deciding between 
a countrywide and individualized proceeding. 

The practice, at the present time, is as follows : ^^ Whether or 
not the complaint specifies a particular firm or particular firms 
the investigation will be countrywide.'*''' The investigation extends 
to firms supplying at least 60% of imports from the country in 
question and the sample of sales extends to 60% of the items 
included within the class of goods included in the investigation. 
If sufficient sales to warrant a dumping finding are found the 
determination will extend to all sales from the country, including 
those of firms embraced by the investigation all of whose sales 
were not at LTFV and firms which were not investigated. This 
practice is, however, subject to the exception that any firm which 
demonstrates that all of its sales have not been at LTFV will be 

The obvious objections to this procedure are first that firms 
which have not been involved in the proceeding at all are sub- 
jected to a finding of dumping and, secondly, that firms whose 
sample of sales are all not at LTFV must incur the additional 
expense of showing that this is also true with respect to the 
remainder of its sales. These adverse consequences are, however, 
mitigated in two respects. First, when goods enter a duty is im- 

«Reg. 153.30(a) (2). 

«Reg. 153.34(a) (2). 

«Reg. 153.35(c). 

" The explanation of present and past policy was furnished by a Customs official. 
The present policy was adopted about three years ago and has recently been changed 
as indicated in n. 48. 

*' Under earlier practice if the complaint specified particular firms the investigation 
was limited to them. 

»* During a portion of the time this exception did not apply and a firm included 
within the investigation, all of whose sales were not at LTFV, would be subject to 
the determination. If the importers agree under 153.34(b) to a six month withholding 
of appraisement so that the withholding of appraisement precedes the affirmative 
determination the withholding of appraisement, which will in these circumstances be 
made before the investigation is completed, will extend to all sales from the country. 


posed only if the particular shipment is being sold at LTFV.*' 
Consequently before a duty is actually imposed an exporter, 
although theoretically subject to a dumping finding, will have an 
opportunity to litigate the LTFV issue. Secondly, the Tariff Com- 
mission, in assessing the injury question, presumably considers 
only the affect of the LTFV sales found by Treasury. Thus the 
sales of any firms not included within the Treasury finding do 
not influence the Tariff Commission determination. 

In sum then the procedure employed is not objectionable on 
the ground that final adverse action is taken against a firm with- 
out an opportunity being provided to contest the merits.^" What 
is questionable, however, is the additional litigation burden im- 
posed by the 100% requirement and the need to demonstrate the 
absence of dumping at the time of entry. The appropriateness of 
imposing this burden turns upon certain empirical questions. It 
does appear likely that other firms will need to charge as low a 
price in the American market as the "dumping" firms in order to 
sell its products here. If the price charged abroad by the dumping 
firms is one prevailing in a market in which the other firms are 
also selling it would also be expected that their foreign prices 
would be the same as well. If both of these generalizations hold 
true there is a substantial likelihood that if the leading firms in 
a foreign country are "dumping" other firms are also doing it. 
Of course, for a variety of reasons, these general tendencies may 
not hold. The question then is whether the probability is high 
enough to warrant what amounts to a rebuttable presumption of 
dumping. I cannot answer this without an extensive empirical 
investigation. My own response, if the entire question of dumping 
were open, is that the adverse consequences of price discrimina- 
tion are so slight it if is assumed a) that all of the sample sales 
were not LTFV or b) that the firm is not included within the 
group having at least 60% of the market, that there is in any 
event little justification for proscription. Again, this procedural 
judgment cannot be divorced from the view taken of the merits. 

** Reg. 153.33. I am advised that this is done by customs securing informally infor- 
mation from firms subject to a dumping finding concerning their sales abroad. On the 
basis of this information and often after consultation with counsel for the firm, a price 
is determined as the controlling one for comparison with sales in the United States. 
These reference prices are then distributed to Customs officials at the ports who 
compare them with the relevant American prices and assess dumping duties accord- 
ingly. I am advised that informal review to the Customs officials is also available at 
the time of entry as well as the formal protests and review to the Customs Courts 
generally applicable to duty determination. 

s" This conclusion must be qualified in one respect. It is possible that injury has 
been found resulting from dumping by others but that for some reason the dumping 
by the firm not included in the original proceeding will not contribute to the injury. 


It does seem, however, even accepting a view which would weigh 
more heavily the detrimental consequences of limited dumping 
by small firms that considerations of fairness and efficiency dic- 
tate that the finding be limited to firms as to which there is 
evidence of substantial dumping. 


Under the present system of review an appeal can be taken to 
the Customs Court and then to the Court of Customs and Patent 
Appeals only after both the LTFV and injury determinations are 
completed and an antidumping duty assessed. -^^ I will consider 
first the timing and then the scope of review. 

Although something can be said for having immediate review 
of the LTFV finding either while the injury issue is being liti- 
gated or in advance of its determination, in balance I reject the 
suggestion. Given the large number of instances in which the 
Tariff Commission finds no injury it would appear wasteful to 
subject the LTFV finding to a second determination until the in- 
jury issue is once decided. If, as proposed here, a unified pro- 
ceeding were adopted then the case for review of one aspect 
before the other were decided would be even weaker. 

I do, believe, however that there is no reason to await the 
assessment of an antidumping duty before allowing appeal. Re- 
view of both the LTFV and injury issue should be permitted 
following the Tariff Commission ruling. Under the present system 
determination of the basic issue can be delayed and protracted by 
the necessity of fixing the exact antidumping duty on the particu- 
lar shipment ^2 in order to have an action subject to review. The 
determination of the antidumping duty due on a particular ship- 
ment may raise complicated issues. Their resolution has no bear- 
ing, however, on the correctness of the basic LTFV and injury 
findings which are based upon earlier transactions. 

I am advised by Treasury officials that in practice this pro- 
cedure is more efficient than it appears to be. A party can enter 
a single shipment and customs will cooperate in accelerating the 

51 19 U.S.C. 169. In J.C. Penney v. The United States Treasury Department, 439 F.2d 
63 (2d Cir.), cert, denied, 404 U.S. 86g (1971), it was held that the statutory method of 
review was exclusive and therefore precluded a separate action seeking to enjoin 
further proceedings on the ground that the hearings utilized were not in accordance 
with constitutional due process requirements. 

5- Apparently in some circumstances the fixing of the duty can take a substantial 
time — reportedly as long as two years. See Report of the Ad Hoc Subcommittee on 
Antitrust and Antidumping of the American Bar Association International Trade 
Committee at 40 (Mimeographed July 27, 1973). 


processing and administrative review of the assessment in order 
to facilitate prompt judicial review. Nevertheless there seems to 
be nothing to be said for whatever delay is encountered even 
assuming full cooperation by customs. Treasury officials agree 
that the assessment and subsequent administrative review add 
nothing significant to the prior consideration of the LTFV issue. 
The process is simply an empty formality which persists only 
because protest of assessment is the traditional way to review 
impositions of duty. The procedure should therefore be changed 
to allow review immediately after the Tariff Commission de- 

It is not possible to state confidently the present scope of review. 
The recent cases ^^ recite as the controlling rule the extremely 
limited standard of review originally enunciated in the 1933 
Kleberg decision ^^ that 

. . . [I]f the Secretary , . . has proceeded in the method prescribed by the 
Congress, we may not judicially inquire into the correctness of his con- 
clusions . . . [T]he judicial power extends only to a correction of his failure 
to proceed according to and within the law. 

At the same time these cases do to a significant degree examine 
the correctness of the determinations (the latest cases have all 
involved the injury not the LTFV question) under the guise of 
deciding whether the action is within the power conferred by 
statute or, in the most recent case,^^ arbitrary. In light of the 
ambivalent attitude toward review manifested in the recent de- 
cisions and the cases in other areas extending the scope of re- 
view with respect to decisions of this kind which are not based 
upon records formally made in adjudicatory hearings,^^ it is 

"Imbert Imports v. United States, 475 F.2d 1189 (CCPA 1973) and City Lumber 
Co. V. U.S. 457 F.2d 901 (CCPA 1972). See generally Metzger and Munsey, Judicial 
Review of Tariff Commission Action and Proceedings, 54 Corn. L. Rev. 285 (1971). 

s< Kleberg and Co. v. United States, 71 F.2d 332 (CCPA 1933). Kleberg itself involved 
the LTFV finding which then was decided along with the injury issue by Treasury. The 
case has been continued to be treated as controlling precedent on both issues after the 
division of responsibility between Treasury and the Tariff Commission. 

fisjmbert Imports, n. 53, supra. The opinion is difficult to interpret. First the court 
apparently adopts the Kleberg rule quoted in the text (475 F.2d 1191). Then, however, 
after considering whether the inferences drawn by the Tariff Commission followed 
from the facts stated in its opinion the Court concludes that "the Findings of the 
Commission are supported by substantial evidence, and the factors pointed out in 
the Chairman's dissent are not of sufficient moment to establish that the decision of 
the majority was arbitrary." The Court further holds that "the Commission . . . 
acted within its delegated authority and correctly interpreted and applied the law." 
Finally, it is asserted that, "the determination would pass the test as not being arbi- 
trary, an abuse of discretion or contrary to law, even if the more extensive scope 
of review under the Administrative Procedure Act (the provision now 5 U.S.C. § 706) 
were appropriate, as appellant contends. As it is we make no express holding with 
regard to the applicability of the Act." (475 F.2d 1192). 

^ See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415 (1971). 


conceivable that the Court of Customs and Patent Appeals will 
eventually adopt a more extensive standard of review. 

In any event I would recommend that review be "on the rec- 
ord," in the sense of determining whether the data assembled in 
the file upon which the final Treasury action was based adequately 
supports the determination, and that a "substantial evidence" 
test be applied. 

I make the first suggestion because of the enhanced need to 
make sure that the factual record is adequate which results both 
from the limited opportunity afforded to challenge the evidence 
included in the record when it is offered and the opportunity for 
ex parte presentations at the confrontation hearings. 

Treasury is apparently prepared to base its determination 
solely upon this "record." The administration Trade Bill pro- 
vides : "The transcript of the hearing [before the Office of Tariff 
and Trade Affairs], together with all papers filed in connection 
with the investigation (including any exhibits and papers to 
which the Secretary , . . shall have granted confidential or in 
camera treatment) constitutes the exclusive record for determina- 
tion." " 

Whether the review of this record is cast as a question of 
"substantial evidence" or arbitrariness may be of relatively little 
significance.^® Particularly if my proposal for more explicit de- 
cisions is adopted it is unlikely that a Court examining the ade- 
quacy of the evidence to support the conclusions reached would 
reach a different result under one standard than under the other. 
Nevertheless the substantial evidence rule is often taken to imply 
a somewhat more searching inquiry. Since I want the review to 
entail a real examination of the adequacy of the evidence to sup- 
port the conclusions reached I recommend that the substantial 
evidence test be explicitly made applicable. 

ST Trade Bill § 310(b). 

s" See Scalla and Goodman, Procedural Aspects of the Consumer Products Safety 
Acts. 20 UCLA L. Rev. 899, 934 (1973). 


Comments op 

The Customs Committee, Administrative Law Section 

American Bar Association 

On a Preliminary Report Submitted to the Administrative Conference of the 
United States Entitled: 

"The Administration by the Department of the Treasury of the Laws 
Authorizing the Imposition of Antidumping and Countervailing Duties" 

At the request of the Administrative Conference, the Customs Committee 
of the Section on Administrative Law, American Bar Association has re- 
viewed a preliminary report submitted to the Administrative Conference of 
the United States by Professor Warren F. Schwartz entitled, "The Adminis- 
tration by the Department of the Treasury of the Laws Authorizing the 
Imposition of Antidumping and Countervailing Duties", dated March 30, 
1973. Our Committee was asked to submit its comments to the Administrative 
Conference by April 20. 

The report was distributed to the members of the Customs Committee for 
comment immediately after the report became available, and a meeting was 
held on April 12 to discuss the report. Present at that meeting were repre- 
sentatives of the Treasury Department who are responsible for the adminis- 
tration of the Antidumping and Countervailing Duty Acts. 

In view of the limited time provided for comment and the lack of any 
opportunity to consult with Professor Schwartz before his report was sub- 
mitted, the Customs Committee is unable to present a comprehensive analysis 
at this time. Instead, we have limited ourselves to comments on the specific 
recommendations set forth on pages 30 and 31 of the report. 

The conduct of investigations under the Antidumping and Countervailing 
Duty Acts involves highly complex technical matters. Even a careful reading 
of the statutes, regulations and published decisions will not necessarily lead 
to a full understanding of the practical problems involved in administration 
of these Acts. Since a complete exposition of these problems is not possible 
within the confines of this report, the members of the Customs Committee 
would welcome the opportunity to present a fuller explanation to the Admin- 
istrative Conference in person. 

The following comments on the recommendations in the preliminary report 
represent the consensus of the majority of the Customs Committee. These 
comments are based upon extensive practical experience of the Committee 
members in representing clients involved in antidumping investigations.' 

RECOMMENDATION 1: A single procedure embracing the LTFV and 
injury issues should be adopted. 

COMMENT: A joint LTFV-injury proceeding would bring the United 
States into closer conformity with the International Antidumping Code which 
requires that both the issues of sales at less than fair value and injury be 
considered from the outset of the investigation. A joint procedure could also 

1 No comment is made concerning the aspects of the report dealing with the 
Countervailing Duty Act, since the report contained no specific recommendations for 
changes in the procedures for administering that Act. 



save time and expense, since it could enable quick termination of investiga- 
tions when there is obviously no reason for a finding of injury. 

Nevertheless, the Committee believes that a single procedure of the type 
apparently contemplated by the report would be impractical and inadvisable. 
The author states that while either the Treasury Department or the Tariff 
Commission could conduct both aspects, the entire investigation should 
probably be assigned to the Treasury Department. But in our view the report 
unduly minimizes the importance of the degree of special expertise required 
to conduct both the LTFV and injury aspects of antidumping investigations. 

The LTFV phase is conducted by officials of the Customs Bureau who have 
developed expertise in Customs valuation matters which involve similar issues. 
An important element of the investigation is the verification of information 
submitted by foreign producers and exporters. This function is performed by 
Treasury representatives in the U.S. embassies overseas. Considerable back- 
ground and experience is needed to conduct verification in a foreign country. 
Obviously, the expertise of the Customs officials in Washington and the 
Treasury attaches overseas cannot readily be transferred to the Tariff 

Furthermore, the Committee believes it would be impossible for the 
Bureau of Customs or the Treasury Department to adequately explore the 
complex issues involved in the injury phase of antidumping investigation. 
Treasury did have this responsibility for more than thirty years, and recogniz- 
ing its lack of economic expertise in questions of injury recommended that the 
injury issue be transferred to the Tariff Commission. This recommendation 
was adopted by Congress in 1954. 

While consolidation of the LTFV and injury issues in either the Treasury 
Department or the Tariff Commission would be inadvisable, the Committee 
believes that there is a need for greater coordination between the two agencies. 
The present dichotomy between the LTFV and injury investigations may 
prevent a full appreciation of the relationship between these issues. Thus a 
single official should have the ultimate responsibility to consider this relation- 
ship and should have discretion in determining the sanctions to be imposed. 
While the Tariff Commission should retain jurisdiction over injury investi- 
gations, its decision should not be final. Instead, the Commission should report 
to the Secretary of the Treasury its conclusions as to the economic effects 
of LTFV sales. The Secretary should consider the Commission's report to- 
gether with the results of the LTFV investigation in determining the extent 
to which dumping duties should be imposed. 

RECOMMENDATION 2: Open adversary hearings should be used to 
explore the factual and legal issues. 

COMMENT: The Customs Committee disagrees with this recommendation 
because it mistakenly assumes that antidumping investigations are, or should 
be, adversary proceedings; and because it does not recognize the practical 
difficulties of dealing with confidential information in an "open adversary 

Before deciding whether to hold "adversary" hearings in antidumping 
investigations, it must first be determined which parties are the adversaries. 
Under one view, the "adversaries" may be the complainant domestic industry 
and the respondent foreign producers, with the Treasury Department acting 
in a quasi-judicial manner, relying exclusively on the evidence developed 
by the parties. 


Such a view is entirely inconsistent with the Antidumping Act. Under the 
Act, the Secretary of the Treasury is charged with the responsibility to con- 
duct an investigation to determine whether a class or kind of foreign 
merchandise is being or is likely to be sold at less than fair value. The Secre- 
tary can initiate an investigation on his own motion without a complaint. 
The complaint only serves to bring to the attention of the Secretary allega- 
tions of sales of less than fair value. From that point on, the entire investi- 
gation is conducted independently by the Treasury Department, whether or 
not there is any participation by the complainant. Treasury does not, and 
cannot, base its findings solely upon evidence presented by the complainant 
domestic manufacturers and respondent foreign manufacturers. Its findings 
are based upon information developed through investigations conducted by 
Treasury officials in foreign countries and in the U.S. Much of this informa- 
tion is not available to complainants, and cannot be made available to them 
because of its highly confidential nature. 

The concept that the Treasury Department and the foreign respondents 
and importers are the "adversaries" is equally mistaken. At no point in the 
investigation does any official in the Bureau of Customs or the Treasury 
Department act in the nature of a trial counsel or prosecutor with responsi- 
bility of establishing a case against the respondent. Throughout the pro- 
ceedings all officials responsible for the conduct of the investigation act as 
independent investigators who attempt to develop all the facts in order 
that the Secretary may reach a proper determination. There is no prosecutor, 
and there are no adversaries as such. 

The report apparently contemplates a formal hearing conducted pursuant 
to the rules of evidence with the right of cross examination, and testimony 
under oath. (Page 13). Such a hearing cannot practically be held in the 
course of the Treasury Department's investigation. This is particularly true 
if the "adversaries" are considered to be the domestic complainant and the 
foreign respondents. The problem of confidential information is far more 
serious than indicated in the report, since Treasury's decisions are based to 
a large extent on highly confidential business information which cannot 
properly be disclosed to third parties. The general standard for determining 
the confidentiality of information is set forth in 19 CFR, Sec. 153.23 which 

"Information will ordinarily be considered to be confidential only if its 
disclosure would be of significant competitive advantage to a competitor, 
or would have a significantly adverse effect upon a person supplying the 
information or upon a person from whom he acquired the information." 

Sec. 153.23(c)(3) lists certain information which is ordinarily regarded 
as confidential. This includes information which would disclose production 
costs and the names of particular customers or the price or prices at which 
particular sales were made. Such data must be kept confidential since its 
disclosure could have serious anti-competitive effects. Yet Treasury's deter- 
minations in most cases are based on just such information. It is difficult to 
see how a formal "adversary" hearing with full rights of cross examination 
could be conducted when this vital information is withheld from disclosure 
by the Treasury Department. 

A requirement for testimony under oath is obviously impractical since 
many of the key witnesses (both foreign company executives and Treasury 
attaches) and much of the voluminous documentation are located overseas. 


Finally, the time limits imposed on Treasury investigations make such a 
hearing impractical. The Secretary is required under Sec. 153.32(c) of the 
regulations to publish his tentative findings within six months after the 
initiation of an investigation or within nine months in more complicated 
investigations. An additional three months can be taken only if the Secretary 
decides that the appropriate tentative decision cannot be made within the 
nine month period and publishes a notice of the reasons in the Federal 
Register. In any case, the final decision must be made no later than three 
months after the tentative decision. These time liYnits are severe in view of 
the complexities of antidumping cases, particularly the need to conduct 
investigations in foreign countries. 

RECOMMENDATION 3: The decisions should contain a statement of 
reasons that reveals the essential bases of the actions taken. 

COMMENT: The Customs Committee agrees with this recommendation. 

The Committee took a similar position in comments submitted to the 
Treasury Department on proposed amendments to the Antidumping Regula- 
tions. However, we wish to point out that the statement of reasons should not 
include the actual price and cost calculations of the Bureau of Customs, since 
this would disclose confidential business information. 

RECOMMENDATION 4: The present severe policy with respect to dis- 
position by acceptance of price assurances should be abandoned. 

COMMENT: The Customs Committee agrees with this recommendation. 

RECOMMENDATION 5: Antidumping orders should be limited to firms 
whose sales in a significant number of instances prove to be LTFV. 

COMMENT: This recommendation deals with the Treasury Department's 
practice of issuing LTFV determinations on a country-wide basis which 
covers all manufacturers of the product under investigation, including those 
who are investigated and found not to be selling at less than fair value. 
The Customs Committee objected to this practice, and urged the Treasury 
Department to specifically exclude those firms who are investigated and 
found not to be selling at less than fair value. Since adoption of the new 
regulations. Treasury has revised its former position and now specifically 
excludes such companies from antidumping orders. 

But the report goes beyond the position taken by the Customs Committee, 
and could, in our view, have unjust results. In recommending that antidump- 
ing orders be limited to the specific firms whose sales were found to be at 
less than fair value, the report overlooks the fact that time limits often make 
it impossible for Treasury to investigate the prices of every firm which is 
selling the product under investigation. In such cases Treasury bases its 
conclusions on a sample investigation of firms whose sales account for the 
preponderance of the imports from the country under investigation. Under 
the new policy, any individual firm which is investigated and found not to 
be selling at less than fair value will be excluded from LTFV finding while 
firms which have not been investigated will not be excluded. However, the 
initiation of an antidumping investigation is a matter of public record, and 
any firm which does not receive a questionnaire from the Customs Bureau 
has the opportunity to voluntarily submit information and to be exempted if 
no dumping margins are found. 

But if Recommendation 5 were adopted, any firm which has the good 
fortune of not being included in Treasury's investigative sample would 
automatically be excluded from an LTFV finding even if it were also selling 


at less than fair value. The firm could continue to dump with impunity, while 
the other companies which were included in the investigative sample would 
be subject to dumping duties. Such a result would create an unfair competitive 
advantage for the uninvestigated firms, and would fail to give the domestic 
industry full relief from the injurious effect of LTFV sales. 

The Customs Committee reached no conclusions concerning Recommenda- 
tions 6, 7 and 8. 

Lawrence R. Walders 
Vice Chairman 
Customs Committee 



WASHINGTON, D. C. 20006 

May 9, 1973 
Nathan Ostroff, Esq. 
Chairman Appeals Board 
U. S. Department of Commerce 
Washington, D.C. 20230 
Dear Nate: 

I have reviewed Professor Schwartz's preliminary report of March 30, 
1973, on dumping and countervailing duties, which you were so kind as to 
send me with your note of April 10. 

I prepared a comment on this paper, which you may find of interest or 
use. I enclose a copy of my comment. 

Sincerely yours, 
George Bronz 



A Comment on Professor Schwartz's Paper 

Professor Schwartz has contributed an interesting and useful paper on 
the administration of the Antidumping Act. He has, however, been limited 
to published material, supplemented only by interviews with Treasury per- 
sonnel. He has done a good job of critical analysis on the basis of material 
to which he has had access. However, without delving closely into the facts 
of individual cases, he has failed to appreciate fully how effective a trade 
barrier the current administration of the Antidumping Act is proving to be. 
I shall limit myself in this comment to a discussion of the Antidumping Act, 
because I have had more recent experience in that field than in the counter- 
vailing duty field. 

Professor Schwartz has done a very useful service by raising the question 
at the outset of the wisdom of the policy of condemning price discrimination 
as such. I have long felt that there is need for basic reexamination of the 
rationale of the Antidumping Act. A few instances of predatory price cutting 
as a monopolistic weapon reached the courts about 60 years ago, and remain 


the prime examples cited by economists for the dangers of discriminatory 
pricing. They have been seized upon by later economists to justify the "Fair 
Trade" kind of trade regulation. In other words, price discrimination calcu- 
lated to lead to monopolistic gouging of the consumer 60 years ago is equated 
with price discrimination which serves to widen competition and thus keep 
prices down. Moreover, economists tend to become so infatuated with the 
elementary model of a simple market in which supply, demand and price 
interact, to tend to create a single price at any given time, that they seem 
to assume that any other pattern is immoral, if not illegal. In today's com- 
plex economic society pricing rarely follows this elementary pattern. No 
serious effort is made to compel unitary pricing throughout our economic 
system. Whether we should continue to impose the Adam Smith norm on 
imports when we impose it on no other branch of coTnmerce, certainly merits 
a thorough examination by qualified economists. 

Predatory price discrimination to destroy competitors as a prelude to 
monopoly is rarely even suggested in the dumping cases before the Treasury. 
In almost all cases, it is a smaller enterprise abroad seeking a toehold in 
the American market which is accused by a giant American competitor of 
"dumping." Usually, the complainant itself practices differential pricing. 
When differential pricing is probably more widespread than the practice of 
the Post Office in selling the Id' stamp for Id- to everyone, why assume it is 
evil, at least when practiced by a foreigner? Perhaps the seller knows where 
his financial interest lies when he sells a shipload of goods in one transaction 
at $X — $1, while he charges $X to some and $X +$1 to others at home. Is 
this evil? Is it unfair to American competitors? 

For 30 years, the Antidumping Act was on the books and was applied only 
occasionally, in striking cases which, typically, seemed to be of a predatory 
character. There was no staff in the Treasury specializing in Antidumping 
Act enforcement. The occasional complaints were dealt with by personnel 
whose primary assignments were in other areas. About 20 years ago, the 
Treasury began encouraging dumping complaints, and has steadily built the 
enforcement of the Antidumping Act into a major administrative activity, 
with a large full-time staff. This development has been accelerated sharply in 
recent years. Today, I think it is fair to characterize the Antidumping Act 
as the principal non-tariff barrier employed in the United States to hamper 
import trade. Witness the fact that antidumping investigations now out- 
number by far escape clause cases in the Tariff Commission. 

Transformation of the Antidumping Act into a major trade barrier has 
been accomplished largely by procedural and substantive devices which enmesh 
more and more importers in its toils. 

The Antidumping Act, in terms, does not call for complaint and adversary 
proceedings. Nevertheless, bureaucracies are rarely self-starting and, in prac- 
tice, an antidumping investigation is almost always prompted by a complaint. 
The complainant is, of course, a domestic competitor. While the regulations 
specify information requisite for a complaint, these requisites are neither 
forcefully defined nor rigorously applied. Almost any piece of paper claiming 
that imports are probably being dumped is, in practice, enough to mobilize 
the very considerable resources of the Treasury Department in a far-flung 
fishing expedition to see whether the charge of dumping can be pinned on 
the accused imports. I have repeatedly proposed that the regulations require 


that a complaint at least make out a prima facie case before the Treasury 
is mobilized, but this proposal has been consistently rejected. 

The second purely procedural point is discussed by Professor Schwartz at 
pages 20-22, under the heading "Coverage of Orders." I would broaden the 
issue and call it "Coverage of Investigation and Orders." The question is 
quite simply this: assuming that a prima facie case is made out that Exporter 
X is dumping, why investigate Exporters Y and Z merely because they export 
from the same country, when there is no evidence suggesting dumping on 
their part? It seems to me that Professor Schwartz is too tolerant in finding 
a rationale for the Treasury practice of assuming that sin is contagious. 
Professor Schwartz's bland statement that a dumping order would not really 
hurt an innocent trader is quite naive. I can think of no greater obstacle to 
trade than the requirement that a large dumping duty be paid on every 
shipment. The issue then can be litigated in the Customs Court and, if the 
importer can there prove his virtue, in the face of the presumptions which 
favor the government in Customs litigation, he may get a refund of his 
dumping duties after about five years. The present procedure reverses the 
presumption of innocence. There is nothing in the Antidumping Act which 
prescribes guilt by association. 

Contributing heavily to the proliferation of dumping activity on the part 
of the Treasury has been the development of a number of substantive- 
procedural rules apparently designed to increase the number of findings of 
dumping, with or without statutory justification. Some glaring examples will 
be discussed in the paragraphs which follow. 

The statute explicitly provides that dumping consists of selling to the 
United States for less than the price in the home market or in third markets 
or, if neither of these comparisons are available, for less than the cost of 
producing the material in question. When the dumping accusation involves a 
Communist country, Treasury has invented a fourth basis for comparison, 
without a shred of justification in the statute. Home market and third market 
prices are dismissed from consideration on the ground that Communist 
countries can price goods as they please. No effort is made to ascertain pro- 
duction costs because it is anticipated that Communist countries would refuse 
to supply such information or, if they did, the figures would be considered 
unreliable. Treasury's solution of the problem was to decide, quite arbitrarily, 
to compare the export prices from the Communist country with home market 
prices in some non-Communist country, often picked quite at random. Since 
Customs duties are typically much higher on imports from Communist coun- 
tries than from non-Communist countries, the result of this rule is that 
Communist shippers, to avoid dumping duties, must charge at least as much 
as shippers in non-Communist countries, and then be subjected to higher 
regular Customs duties. In short, the Communist countries are forbidden to 
be competitive on pain of being held to be dumping. 

If a foreign company distributes its product at home by direct sale to large 
numbers of small retailers. Treasury will consider it to be dumping if it sells 
to the United States for any less than the price it charges to the retailers at 
home, even though the sale to the United States may be an enormous bulk 
quantity to a distributor in the United States who, in turn, sells to retail 
outlets here. The Customs regulations permit recognition of quantity dis- 
counts only if they are also offered in the home market and apply, in fact, to 
at least 20% of sales there. Thus, a company with its own distributing 


organization in the home market is effectively barred from adopting a different 
plan of distribution for the United States market. 

A foreign producer may have an elaborate selling organization in his 
home market, while he sells to a single distributor in the United States. 
Obviously, his costs are greater on the home market sales, and elementary 
business accounting would dictate that he charge enough at home to cover 
the costs of the sales organization, while charging less on the bulk sales 
to a faraway national distributor who bears the burden of reselling. Under 
the current regulations an "allowance for selling expense" is only made in 
the home market to the extent of the selling expense in the United States 
market. Somehow there is considered to be something illegitimate about 
diverse selling practices into different markets with pricing appropriate to 
such diversity. 

The Treasury treatment of credit costs is another example of an arbitrary 
refusal to recognize normal business costs. It is common for sellers to offer 
credit in the home market, while making export sales only for cash. Obviously, 
the extension of credit is costly; equally obviously businessmen charge their 
credit customers enough to cover the cost of credit. Credit costs include the 
cost of the money itself (what the businessman must pay his own bank for 
a loan) , the credit risk (the losses from non-payment) , and the administrative 
cost of credit (billing, accounting, collection expense, delayed payments, etc.). 
Treasury is willing to recognize the first of these as a legitimate cost for 
which adjustments are made, but will not recognize the other two unless "a 
showing" is made. The "showing" is impossible until a sufficient period has 
gone by for these costs to be incurred. Thus, as a practical matter, they are 
disallowed. Here again, Treasury refuses to recognize perfectly ordinary 
justification for differential prices. 

Quite often a company's pricing policy may follow no recognizable pattern. 
Through variable absorption of freight and other practices widely used in 
trade, there may be a wide spread of prices in the home market as well as in 
exports to the United States. One might assume that a rational method of 
comparing prices in such cases is to take the average price at which the 
commodity is sold at home and the average at which it is exported to the 
United States in a period, and thus see whether the product is being "dumped" 
into the United States. However this is not what the Treasury does. In 
deciding whether or not there is dumping in the initial investigation. Treasury 
will calculate a home market average, but then compare it individually with 
such separate sale to the United States. In the pricing pattern postulated, 
this will inevitably yield some transactions at dumping prices. After a dump- 
ing order is issued, and Treasury is appraising individual importations, it 
goes even further. It recognizes no averages on either side of the ledger. 
Each sale in the home market is considered to establish a "foreign value," which 
becomes the standard for each importation into the United States from that 
date until the next sale in the home market which, in turn, establishes a new 
standard. With this type of arithmetic it is inevitable that almost half of all 
importations will be found to be dumped, even when the average price of 
sales to the United States is higher than the average price of home market 

The examples discussed in the paragraphs above are largely drawn from 
my own experience in cases I have handled. I am confident that there are many 
more similar "rules" and practices employed by the Treasury, all of which 


serve to "catch" the imports and label them as dumping whenever the pricing 
pattern diverges from the simplistic Adam Smith model. It is dffiicult to 
conceive of any other way of administering the Antidumping Act which 
would be as effective in labeling differential pricing practices as "dumping." 

A word must be added about the effect of a dumping order. The obstacle 
to trade resulting from such an order can be indicated by the history of one 
case I have had. A final dumping order was issued in August, 1968. An 
entry made before that date, on which appraisement was withheld, was 
liquidated in December, 1971, and, at that time, the importer was compelled 
to deposit a large sum of money as dumping duties. A protest was duly filed 
asking for "further review" in Washington. The importer finally managed to 
arrange a conference on the subject in Washington in July, 1972. Following 
the conference, further documentation was submitted. To this date, no decision 
has been made on the protest. Thus, it is now more than five years after the 
date of the import, and almost five years after the date of the final dumping 
order, yet we have not yet succeeded in getting a final administra',ive ruling 
on the liability for dumping duties. If it is necessary to carry this case to 
court, it is a safe guess that the court proceedings would take at least 
another two years, and quite possibly longer. The time could be shortened 
but only by grace of the Treasury. There is no jurisdiction in the courts to 
review the Treasury decision until it has become final by way of liquidation. 
Even after that, the Treasury is given two years to consider any protest 
before the importer can force the question to the courts. How many importers 
can afford to continue importing under these conditions? 

One more point of detail. In footnote 22, Professor Schwartz cites the 
fishnet case as one in which there was "no injury." He is incorrect. The Tariff 
Commission found injury. 

May 9, 1973. 


WASHINGTON, D. C. 20580 

Office of the Secretary 

July 27, 1973 
Mr. Antonin Scalia 
Administrative Conference of the 

United States 
New Executive Office Building 
Washington, D.C. 20506 
Dear Mr. Scalia: 

This is in response to your letter dated March 30, 1973, in which you re- 
quested the views of the Federal Trade Commission with respect to Professor 
Warren Schwartz's Report entitled "The Administration by the Department 
of the Treasury of the Law Authorizing the Imposition of Antidumping and 
Countervailing Duties." 

The remarks of the Commission are rendered solely on the basis of the 
analysis presented in the Schwartz Preliminary Report. Because the admin- 
istration of countervailing duties is so closely intertwined with foreign policy 
considerations at the Presidential and Congressional levels, and because the 
law governing countervailing duties is outside the expertise of the Com- 


mission, we shall decline to comment on that portion of the report. However, 
it is the view of this Commission that the basic purpose of these laws to 
protect domestic industries from injury due to certain unfair acts of foreign 
manufacturers does not require that domestic industries be insulated from 
legitimate price competition from foreign manufacturers. Because the Com- 
mission has not substantive expertise with respect to the antidumping duty 
laws, we will not attempt to comment upon certain policy conclusions cited 
at pages 30 and 31 of the Report. 

Professor Schwartz, however, offers a number of recommendations which 
are essentially procedural. Specifically, he suggests that: 

"2) Open adversary hearings should be utilized to explore the factual 
and legal issues." 

"3) The decisions should contain a statement of reasons that reveals the 
essential bases of the actions taken." 

"7) If the present procedures are followed, so that the documents em- 
bodying the reasoning underlying the action taken are not available to 
the general public, some provision should be made for outside persons to 
be granted access to data required for an informed evaluation of the 
performance of the agency." 

It appears that some action has already been initiated to remedy the 
problems which these recommendations addressed. 

First, the Treasury Regulations relevant to this matter [37 Fed. Reg. 
26248 (Dec. 9, 1972)] which have been in effect since January 8 of this year, 
provide for the availability of all information in antidumping proceedings 
(§ 153.23), a time limit on investigations (§ 153.32(c)) and the opportunity 
for the presentation of views by interested persons (§ 153.37). 

Second, Section 3.10(b) of H.R. 6767, 93d Congress, 1st Session, the Ad- 
ministration's proposed "Trade Reform Act of 1973," would amend the Anti- 
dumping Act to require the Secretary of the Treasury and the Tariff Com- 
mission to conduct a hearing on the record. The "defendant" would have the 
right to appear by counsel or in person. Interested parties would be allowed 
to intervene and appear at the hearing either by counsel or in person. The 
transcript of the hearing, together with all papers filed in connection with 
the investigation would constitute the "exclusive record for determination" 
and would be available to all persons. The agencies would be required to 
publish in the Federal Register a statement of findings and conclusions and 
the reasons or bases therefor, on all material issues of fact or law presented 
on the record. Also, both the antidumping and countervailing duty laws 
would be amended to establish statutory time limits for reaching decisions 
in investigations. These amendments are supported by both the President 
of the United States ' and the U.S. Special Representative for Trade Negotia- 
tions." If enacted into law, this legislation would go a long way toward 
accomplishing what Professor Schwartz has recommended. 

Finally, Professor Schwartz alludes to the possibility of the Federal Trade 
Commission assuming responsibility for the administration for the anti- 

1 Trade Reform, Message from the President of the United States, H.R. Doc. No. 
93-«0 (April 10, 1973) at Page 7. 

2 Testimony of Ambassador William Eberle, U.S. Special Representative for Trade 
Negotiations, before the House of Representatives, Committee on Ways and Means 
(May 10, 1973) at page 48. 


dumping and countervailing duty laws. However, the Commission has no 
special expertise in this area and would not view such a role as complementing 
its present responsibilities. Furthermore, assumption of such a role at this 
time would unduly strain the Commission's limited resources. For these 
reasons, the Federal Trade Commission would not recommend that the Com- 
mission assume responsibility for the administration of these statutes. 

We have welcomed this opportunity to comment upon Professor Schwartz's 

By direction of the Commission. 

Charles A. Tobin, 


(As published in Michigan Law Review, Vol. 71, No. 2 (December 1972). 


Arthur Earl Bonfield* 
I. Introduction 

THERE is an obvious need to conduct our governmental affairs 
effectively, expeditiously, and inexpensively. No administrative 
rule-making procedure is acceptable unless it fairly takes account of 
this consideration. Consequently, procedural requirements that 
unduly fetter agency action, or frustrate its purposes, are obviously 
unwise. What is needed, therefore, is a system of rule-making that 
will strike a sensible balance between the need for adequate public 
participation in that process, and the need for efficient government. 
In striking that balance, society's interest in involving affected mem- 
bers of the public in administrative rule-making at an early stage is 
not so slight that it should be set aside solely on the basis of minor 
inconvenience or expense to government. 

Schemes meant to assure public participation in administrative 
rule-making guarantee interested persons an opportunity to com- 
municate their views and information to the relevant government 
officials before the latter take final action on rules.* This is desirable 
for a number of reasons. Such participation helps to elicit from 
those who are in the best position to provide it, the information 
necessary for intelligent action by the agency making rules. A single 
agency's accumulated knowledge and expertise are rarely sufficient 
to provide all the data upon which rule-making decisions should 
be based. Even if it has the relevant factual information, an agency's 
view may be so myopic that outside feed-in is necessary to put the 
information properly in perspective and to give it meaning. 

Public participation in rule-making is important for another 

• John Murray Professor of Law, University of Iowa. B.A. 1956, Brooklyn College; 
J.D. 1960, LL.M. 1961, Yale University.— Ed. 

This Article is based upon a report prepared by the author under the auspices 
of the Administrative Conference of the United States (ACUS). The Conference, how- 
ever, does not in any way approve it or evaluate its content, which is the sole respon- 
sibility of the author. The Administrative Conference has not yet taken action of any 
sort on this subject. The Conference was established by Congress in 1964 to study the 
efficiency, adequacy, and fairness of federal administrative practices and procedures. 
It is empowered to make recommendations for improvements in those procedures by 
which the administrative bodies of our national government determine private rights 
and obligations. See 5 U.S.C. §§ 571-76 (1970); United States Government Organiza- 
tion Manual 1970-71, at 394-95. 

1. On the following three paragraphs, see Cramton, The Why, Where and How of 
Broadened Public Participation in the Administrative Process, 60 Geo. L.J. 525, 527-30 
(1972); Grossbaum, Procedural Fairness in Government Contracts: The Procurement 
Regulations. 57 Va. L. Rev. 171, 261-62 (1971). 



reason. Because agency staffs must synthesize the varying interests 
and competing policies that are related to the scheme they are 
charged with implementing, they cannot usually be relied upon to 
present forcefully, on their own motion, the views of environmental, 
consumer, minority, or other inadequately represented groups. And 
some agencies may not be trusted to vindicate the public interest 
without outside input because they may have been captured by those 
whose interests they regulate or represent. Furthermore, absent an 
ability of the concerned public to participate in the rule-making 
process and thereby prod the agencies, officials satisfied with the status 
quo may neglect to re-examine their positions in light of new views 
or information that becomes available. 

Through public participation, individuals can attempt to defend 
themselves against an exercise of rule-making power that may be 
detrimental to their interests and unwarranted or unnecessary. It 
also is one of the most effective ways by which such decision-making 
may be kept responsive to the wishes of the citizenry. Administrators 
will probably be more responsive to commonly felt needs and de- 
sires if they must give interested people an opportunity to present 
their views before rules are finally promulgated. After all, agencies 
have an inducement to respond to the articulated needs of those who 
provide input into the process. Response to those needs will earn 
agencies the approbation of individuals or groups whose interests 
may be advanced or protected by such official action. Moreover, in 
some cases people may be less likely to sabotage a rule they dislike 
if they have had an adequate opportunity to present their objections 
to the relevant officials prior to its promulgation. 

According to the federal Administrative Procedure Act (APA)^ 
the term "rule-making" means "agency process for formulating, 
amending, or repealing a rule."^ Another provision of the APA 

"[R]ule" means the whole or a part of an agency statement of general 
or particular applicability and future effect designed to implement, 
interpret, or prescribe law or policy or describing the organization, 
procedure, or practice requirements of an agency and includes the 
approval or prescription for the future of rates, wages, corporate or 
financial structures or reorganization thereof, prices, facilities, ap- 
pliances, services or allowances therefor or of valuations, costs, or 
accounting, or practices bearing on any of the foregoing.* 

2. Act of June 11, 1946. ch. 324, 60 Stat. 237. as amended, 5 U.S.C. §§ 551-59, 701-06 

3. 5 U.S.C. § 551(5) (1970). 

4. 5 U.S.C. § 551(4) (1970). 


The breadth of this statutory definition means that much may be 
swept within the compass of the terms "rule" and "rule-making" 
that might not, at first blush, ordinarily be deemed to constitute a 
"rule" or "rule-making." That fact should be kept in mind through- 
out the remainder of this Article. 

For example, whether or not they affect the public in any way, 
day-to-day internal agency planning, operations, and administration 
that culminate in a fixed policy of any sort, contingent or otherwise, 
may be deemed "rule-making." The all-encompassing open-ended 
language defining a "rule" as "an agency statement of general or 
particular applicability and future effect designed to implement, 
interpret, or prescribe law or policy or describing the organization" 
suggests the propriety of this conclusion. Nevertheless, much internal 
agency planning, administration, or operations of this sort may not, 
in the end, be treated as "rules" under the APA despite this very 
broad language, for a large portion of these activities would not tra- 
ditionally have been considered "rule-making.""^ Indeed, a large part 
of the internal activities described above could, instead, constitute a 
sui generis species of unlabeled function not defined by the APA and 
not meant to be within its ambit. The scope of the term "rule" used 
in the APA may, therefore, be somewhat unclear at its fringes. 

This Article, however, will proceed on the assumption that all 
internal agency planning, administration, and operations culminating 
in a fixed policy of any sort, contingent or otherwise, would be 
deemed "rule-making" within the Act's literal language whether or 
not they substantially affect the public. In subsequent discussion, 
then, some things which arguably may not be "rule-making" will be 
treated as such because of the open-ended, broad definition of "rule" 
in the APA, and the negative implications that can be drawn from 
existing exemptions in the rule-making section such as that for "gen- 
eral statements of policy" and that for "rules" relating to "agency 
management or personnel."* By clearly assuming that all such plan- 
ning, operations, and administration resulting in a fixed policy of 
any sort are "rule-making" for purposes of this study, several possible 
objections to, and difficulties with, the ultimate point of this entire 
exercise may be avoided. As noted, however, this will be done with 

5. Despite the breadth of language in section 551(4), that provision was not in- 
tended to convert into a rule anything not considered a rule prior to adoption of the 
APA. The traditional distinction between rule-making and adjudication is, therefore, 
continued under this provision despite the inclusion of the "or particular applicabil- 
ity" phrase or the potentially limitless scope of the definition. See generally 1 K. 
Davis, Administrative Law Treatise § 5.02 (1958). 

6. 5 U.S.C. §§ 553(a)(2), (b)(A) (1970). 



the full recognition that, despite the broad statutory definition of 
"rule," much of this kind of internal agency planning, operations, 
and administration may be neither "rule-making" nor "adjudication" 
and, therefore, entirely outside the intended scope of the APA. 

To assure adequate public participation in rule-making, section 
4 of the original Act, now section 553, provides mandatory pro- 
cedures to be followed in all rule-making to which it applies. How- 
ever, section 553(a) makes these procedures inapplicable "to the 
extent that there is involved — (1) a military or foreign affairs func- 
tion of the United States; or (2) a matter relating to agency manage- 
ment or personnel or to public property, loans, grants, benefits, or 
contracts." The categorical exclusions from section 553 for rule- 
making relating to "public property, loans, grants, benefits, or 
contracts," have been investigated and found to be unjustified,^ 
with the result that the Administrative Conference of the United 
States^ and the Administrative Law Section of the American Bar 
Association^ have recommended that they be repealed. A bill has 
been introduced in Congress to accomplish this result.^*^ In the 
meantime, many federal agencies have voluntarily bound themselves 
to ignore the exemptions from usual rule-making procedures for 
rules relating to "public property, loans, grants, benefits, or con- 
tracts."^^ No comprehensive study, however, has yet been undertaken 

7. See Bonfield, Report of the Committee on Rulemaking in Support of Recom- 
mendation No. 16, in 1 ACUS, Recommendations and Reports 306 (1970). 

8. Recommendation No. 16, Elimination of Certain Exemptions from the APA 
Rulemaking Requirements, in 1 ACUS, supra note 7, at 29 [hereinafter Recommenda- 
tion No. 16]. 

9. Resolution No. 2, in Crowther, et ah, Report to Council of Administrative Law 
Section of Special Committee on Revision of Administrative Procedure Act 8 (ABA 
1972) [hereinafter Crowther]. See also 95 ABA, Reports 548 (1970), in which the House 
of Delegates approved the recommendation that 

amendments should be enacted to the APA in order to assure: Broadening the 
coverage of provisions for notice and opportunity for public participation in 
rulemaking where formal procedures are not required by limiting, in appropri- 
ate instances, exemptions now included in the Administrative Procedure Act so 
far as it may be done without occasioning delay or expense disproportionate to 
the public interest. 

10. S. 1413, 92d Cong., 1st Sess. (1971). See also 116 Cong. Rec. 6478-79 (1970) (re- 
marks of Senator Kennedy). 

11. See 29 P. & F. Ad. L. Newsletter, 2d Ser., No. 2, Sept. 21, 1971, at 1 (Department 
of the Treasury, Department of Labor, Federal Home Loan Bank Board); 36 Fed. Reg. 
2532 (1971) (Department of Health, Education, and Welfare); id. at 4291-92 (Depart- 
ment of Housing and Urban Development); id. at 8336-37 (Department of the In- 
terior); id. at 13804 (Department of Agriculture); id. at 16716 (Small Business 
Administration); letter from Donald Johnson to Senator James Eastland, Jan. 24, 
1972 (Veterans* Administration). See also 30 P. & F. Ad. L. Newsletter, 2d Ser., No. 2, 
Feb. 22, 1972, at 91 (Veterans' Administration). See generally ACUS, 1971-72 Report 
(1972): "About 20 departments or agencies have published rules or policy statements 
which commit the agency to the use of notice and comment rulemaking procedures 
in these areas," 


with respect to the other section 553(a) categorical exemptions from 
the rule-making provision of the federal APA — the exemption for 
rule-making involving a "military or foreign affairs function," and 
the exemption for rule-making "relating to agency management or 
personnel." Only the former exemption will be the subject of this 

The question that will be considered here is whether the particu- 
lar exemption from section 553 for rule-making involving a "military 
or foreign affairs function" is justified and should be continued. 
As noted earlier, strong reasons favor public participation in the 
administrative rule-making process. This exemption may, therefore, 
be justified only insofar as it is narrowly tailored to preserve, in a 
degree related to their comparative importance, other important 
conflicting public interests. Exemptions from an obligation other- 
wise imposed on agencies to implement public participation in 
rule-making should be countenanced only to the extent to which 
they are necessary to preserve other values of equal or gieater 

II. The Exemption and Section 553 

Section 553(b)-(d) attempts to assure that the public has an 
opportunity to participate meaningfully in the rule-making process. 
More specifically, section 553(b) requires that an agency contemplat- 
ing the issuance of a substantive rule^^ must publish a notice in the 
Federal Register of the proposed rule-making, indicating the time, 
place, and nature of the public rule-making proceedings, and a 
statement of the specific legal authority under which the rule is 
proposed.^* The agency must include either the actual provisions 

12. The desirability of the various exclusions of 5 U.S.C. § 553(a) (1970) would 
seem most feasibly and wisely ascertained by a separate analysis of each. The exclu- 
sions of section 553(a)(1) will, therefore, be examined as isolated, operable entities in 
order to determine whether they are independently justified. In doing so, this Article 
will proceed as if the "public property, loans, grants, benefits, or contracts" exclusion 
had been repealed, and as if the elimination of subsection (a)(1) would automatically 
subject that rule-making now excluded by it to the strictures of section 553, subject 
only to other existing exemptions found in that provision. 

13. Section 553(b)(A) expressly exempts "interpretative rules, general statements of 
policy, or rules of agency organization, procedure, or practice" from the notice re- 
quirements. See Dept. of Justice, Attorney General's Manual on the Administra- 
tive Procedure Act 30 (1947) [hereinafter Attorney General's Manual], which states 
that this restricts the application of the notice and participation requirements in what 
is now 5 U.S.C. §§ 553(b)-(c) (1970) "to substantive rules issued pursuant to statutory 
authority," citing Senate Comm. on the Judiciary, Admini.str.a.tive Procedure Act: 
Legislative History, S. Doc. No. 248, 79th Cong., 2d Sess. 19 (1947) [hereinafter Leg- 
islative History]. 

14. The House Report on the APA stated: "The required specification of legal 


of the proposed rule, or a summary statement of the subjects or 
issues to which they relate. The notice "must be sufficient to fairly 
apprise interested parties of the issues involved, so that they may 
present responsive data or arguments relating thereto" as they are 
entitled to do under section 553(c), ^"^ The agency also has the option 
of dispensing with such publication if the notice requirement is 
functionally satisfied because all "persons subject thereto are named 
and either personally served or otherwise have actual notice thereof 
in accordance with law."^^ 

After giving notice, agencies are required by section 553(c) to 
accord interested persons a chance to participate in the particular 
rule-making "through submission of written data, views, or argu- 
ments with or without opportunity for oral presentation." In prac- 
tice the procedure utilized 

may take a variety of forms: informal hearings (with or without a 
stenographic transcript), conferences, consultation with industry com- 
mittees, submission of written views, or any combination of these. 
... In each case, the selection of the procedure to be followed will 
depend largely on the nature of the rules involved. The objective 
should be to assure informed administrative action and adequate 
protection to private interests.^*^ 

It must be reiterated, however, that the statutory opportunity to 
submit "written data, views, or arguments with or without opportun- 
ity for oral presentation" states only "the minimum requirement . . . 
of public rule making procedure, "^^ 

An agency must review the materials presented to it in the course 
of public rule-making proceedings, and include in any rules resulting 
from this process a statement of their basis and purpose. "The agency 
must analyze and consider all relevant matter presented. The re- 
quired statement of the basis and purpose of rules issued should not 

authority must be done with particularity. Statements of issues in the general statutory 
language of legislative delegations of authority to the agency would not be a compli- 
ance with the section." Legislative History, supra note 13, at 258. 

15. Id. at 200, 258. See also California Citizens Band Assn. v. United States, 375 
F.2d 43, 48-49 (9th Cir. 1967) (notice of rule-making is sufficient if it provides a de- 
scription of subjects and issues involved, and agency is not required to publish every 
precise proposal which it may ultimately adopt as a rule). 

16. 5 U.S.C. § 553(b) (1970). 

17. Attorney General's Manual, supra note 13, at 31. The legislative history in- 
dicates that section 553(c) "leaves agencies free to choose from the several common 
types of informal public rule making procedures, the simplest of which is to permit 
interested persons to submit written views or data . . . ." Legislative History, supra 
note 13, at 19. 

18. Legislative History, supra note 13, at 200, 259 (emphasis added). 


only relate to the data so presented but with reasonable fullness 
explain the actual basis and objectives of the rule."^" Nevertheless, it 
is clear that the statute "does not require the formulation of rules 
upon the exclusive basis of any 'record' made in informal rule-mak- 
ing proceedings."^® However, where statutes require a particular 
kind of rule to "be made on the record after an opportunity for an 
agency hearing,"^! other provisions of the APA outlining more 
formal hearing requirements will govern that proceeding instead 
of these informal section 553 provisions;^^ and in such a case, the 
rule must be made on the formal "record" so adduced. 

According to section 553(b)(B) neither the advance notice nor 
public participation requirements outlined above apply in those 
cases where "the agency for good cause finds (and incorporates the 
finding and a brief statement of the reasons therefor in the rules 
issued) that notice and public procedure thereon are impracticable, 
unnecessary, or contrary to the public interest." This provision will 
be discussed in more detail later in this Article. 

In addition to general notice of proposed regulations, and an 
opportunity for interested persons to communicate their views 
thereon to the relevant government officials, adequate public parti- 
cipation in the rule-making process also requires that the exact terms 
of a new rule be published a reasonable time before its effective date. 
Otherwise, even if the public has participated in the preliminary 
formulation of a rule, the final details of its text may not be known 
to interested parties until the date of its promulgation as law. As a 
result, a procedure for delayed effectiveness is necessary "to correct 
error or oversight in regulations before, rather than after, they 
become effective."23 Such a safeguard will "afford persons affected 
a reasonable time to prepare for the effective date of a rule or rules 
or to take any other action which the issuance of the rules may 
prompt. "2* 

A further requirement may, therefore, be found in section 553(d) 
relating to the time period that agencies must allow between the pro- 

19. Id. at 201, 259. 

20. Attorney General's Manual, supra note 13, at 31, citing Hearings on S. 674, 
S. 673 and S. 918 Before a Subconim. of the Senate Comm. on the Judiciary, 77th Cong., 
1st Sess., pt. 1, at 444 (1941) [hereinafter 1941 Hearings], which is limited authority for 
the otherwise sound conclusion of the Manual on this point because the testimony 
referred to is that of only a single person. Commissioner Aitcheson of the ICC. 

21. 5 U.S.C. § 553(c) (1970). 

22. 5 U.S.C. §§ 556-57 (1970). 

23. Attorney General's Committee on Administrative Procedure, Final Report 
114 (1941). 

24. Legislative History, supra note 13, at 201, 259. 


mulgation of a substantive rule and its effective date. It states that 
the required publication of a substantive rule under section 552, the 
freedom-of-information provision of the Act, must be made at least 
thirty days prior to its effective date.^^ It is clear that the thirty-day 
notice provision is applicable even where the public rule-making 
procedures of section 553(b)-(c) are not because they are found to 
be "impracticable, unnecessary, or contrary to the public interest."^' 
Exceptions are provided to this time requirement, however, for 
those situations in which the substantive rule "grants or recognizes 
an exemption or relieves a restriction. "^^ An exemption is also 
provided where the agency decides, "for good cause found and pub- 
lished with the rule,"28 that a minimum thirty-day period between 
the time of a rule's publication and its taking effect is unnecessary. 
This last exemption will also be discussed in more detail later in 
this Article. 

All of the above requirements — advance public notice of rule- 
making, opportunity to submit views, and delayed effectiveness of 
rules — are applicable only to substantive rules and not to rules of 
agency procedure.^^ Nor are any of the above requirements applicable 
to "interpretative rules [or] general statements of policy."^® A report 
written under the auspices of the Administrative Conference of the 
United States examined the justification for the latter two exemp- 
tions and found their continuation justified.^^ The Conference itself, 
however, has taken no official action on the subject of that report. 

Meaningful public participation in the rule-making process would 

25. See Attorney General's Manual, supra note 13, at 36: 

The discussion on section [553(d)] in the reports of both the Senate and House 
Committees on the Judiciary makes clear the phrase "The required publication 
or service of any substantive rule" does not relate back or refer to the publica- 
tion of "general notice of proposed rule making" required by section [553(b)]; 
rather it is a requirement that substantive rules which must be published in the 
Federal Register (see section [552(a)(1)(D)]) shall be so published at least thirty 
days prior to their efifective date. 
The language of section 553(d) does, of course, lend itself readily to the opposite con- 
struction, but it seems to have been construed only in the manner suggested by the 
Attorney General's ManuaK See, e.g., Lansden v. Hart, 168 F.2d 409 (7th Cir. 1948). 
See also Commission on Organization of the Executive Branch of the Government, 
Task Force Report on Legal Services and Procedure 160 (1955). The congressional 
discussion referred to may be found in Legislative History, supra note 13, at 201, 259. 

26. Legislative History, supra note 13, at 200-01, 259. 

27. 5 U.S.C. § 553(d)(1) (1970). 

28. 5 U.S.C. § 553(d)(3) (1970). 

29. 5 U.S.C. §§ 553(b)(A), 553(d) (1970). 

30. 5 U.S.C. § 553(b)(A) (1970). See also 5 U.S.C. § 553(d)(2) (1970). 

31. Bon&eld, Some Tentative Thoughts on Public Participation in the Making of 
Interpretative Rules and General Statements of Policy Under the AJ'ji., 23 Ad. L, 
Rev. 101 (1971). 


also seem to demand recognition of another administrative obligation 
and private right. Interested parties should be able, on their own 
motion, to induce a reasoned consideration of the propriety of the 
issuance, amendment, or repeal of a rule by those authorized to make 
and modify rules. Otherwise, administrators satisfied with the status 
quo might neglect to re-examine their position in light of new views 
or information that becomes available. A right to petition is not only 
valuable as a protection for private interests, but is also necessary 
to assure sound government. It forces agencies to reconsider their 
position on existing or proposed rules in light of petitioners' objec- 
tions, and therefore makes it more likely that wise policies will be 

Section 553(e) insists, therefore, that even if the notice, public 
participation, and delayed effectiveness requirements of section 553 
(b)-(d) are not applicable because they come within the "good cause" 
exceptions noted earlier, every agency must give interested persons 
"the right to petition for the issuance, amendment, or repeal of a 
rule" — substantive or otherwise. It seems clear, however, that the 
filing of such a petition does not itself require an agency to engage in 
a public rule-making proceeding on that subject.^^ All the agency 
must do is to act on the petition in accordance with the procedures 
it has promulgated under other provisions of the APA.^^ The agency 
may, of course, either grant such a petition, undertake public rule- 
making proceedings in relation to it, or deny the petition. The chief 
practical significance of this express right-to-petition requirement 
seems to be that the denial of a section 553(e) petition calls into play 
the provisions of section 555(e),^* which insist that 

[pjrompt notice shall be given of the denial in whole or in part of 
a written application, petition, or other request of an interested 
person .... Except in affirming a prior denial or when the denial 
is self-explanatory, the notice shall be accompanied by a brief state- 
ment of the grounds for denial. 

No mention has yet been made of the exemptions contained in 
section 553(a) for rule-making that involves "a military or foreign 
affairs function," a "matter relating to agency management or per- 
sonnel," or a matter relating to "public property, loans, grants, 
benefits, or contracts." The language of section 553(a) operates to 

32. Attorney General's Manual, supra note 13, at 38; Legislative History, supra 
note 13, at 201, 260. 

33. 5 U.S.C. §§ 552(a)(l)(B)-(C) (1970); Legislative History, supra note 13, at 260. 

34. Attorney General's Manual, supra note 13, at 39, citing Legislative History, 
supra note 13, at 201, 260. 


exclude entirely, and without qualification, all rule-making in the 
categories enumerated therein from every provision of section 553 
(b)-(e). Consequently, in no case are any of the requirements imposed 
on administrative agencies by the provisions previously discussed 
applicable to these specifically exempted classes of rule-making. This 
means, for example, that unless some other statute specifically directs 
the contrary,^^ agencies making rules involving a "military or foreign 
affairs function" of the United States are never obliged as a matter 
of law to (1) publish notice of proposed rule-making in the Federal 
Register according to the specifications of section 553(b); (2) give 
interested persons a chance to participate in the formulation of 
rules through submission of views or data, according to the terms of 
section 553(c); (3) publish substantive rules at least thirty days 
before their effective date as required by section 553(d); or (4) give 
interested persons "the right to petition for issuance, amendment or 
repeal of a rule," according to the terms of section 553(e).^® 

The blanket section 553(a) provisions make no allowance what- 
soever for the possibility that rules involving the excluded subjects 
may differ in their need to be exempted from one or more of the 
requirements of subsections (b)-(e). That is, section 553(a) does not 
recognize the possibility that certain rule-making involving a "mili- 
tary or foreign affairs function" may need to be exempted from some 
of the subsection (b)-(e) requirements, and not from others. Simi- 
larly, this exclusionary provision does not recognize that certain 
rule-making within its terms may need exemption from all of those 
requirements and other such rule-making from none of them. 

The exemptions currently found in section 553(a) obviously pro- 
ceed upon the assumption that as to the exempt categories of subjects 
one can make an across-the-board judgment. The policies favoring 
public participation in rule-making are outweighed by the conse- 
quences of subjecting these particular categories of rule-making to 
the requirements of subsections (b)-(e), or by the consequences of 
utilizing a more flexible approach to determine whether in any 
given case rule-making in these categories should be subjected to 
those requirements. In this Article, the validity of the assumption 

35. Another statute will control if it directs that certain kinds of rules relating, 
for example, to loans, grants, or benefits be made in accordance with the requirements 
of section 553(b)-(e). See, e.g., 5 U.S.C. § 559 (1970). This conclusion is supported by a 
statement made during the congressional hearings on the APA: "These exceptions 
would not, of course, relieve any agency from requirements imposed by other stat- 
utes." Legislative History, supra note 13, at 199. 

36. Attorney General's Manual, supra note 13, at 39; Legislative History, supra 
note 13, at 199, 257. 


underlying section 553(a) must be carefully examined and tested with 
respect to the particular section 553(a)(1) exemption for rule-making 
involving a "military or foreign affairs function." As noted earlier, 
such an assumption has already been rejected with respect to rule- 
making relating to "public property, loans, grants, benefits, or con- 

When rule-making is excepted from the requirements of section 
553(b)-(e) by section 553(a), agencies may use any rule-making pro- 
cedure they please unless, of course, another statute specifies other- 
wise. This means that with respect to rule-making involving a 
"military or foreign affairs function," it is completely up to the 
agency to decide whether there shall be any public participation in 
rule-making at all. And if the agency decides that some such partici- 
pation is desirable, it may determine the form or extent of that 

The legislative history of the APA indicates that none of the 
blanket introductory exemptions from the section 

is to be taken as encouraging agencies not to adopt voluntary public 
rulemaking procedures where useful to the agency or beneficial to 
the public. The exceptions merely confer a complete discretion upon 
agencies to decide what, if any, public rulemaking procedures they 
will adopt in a given situation within their terms." 

In practice, however, most agencies do not usually exercise their 
discretion to follow the requirements of section 553(b)-(e) when 
they are not bound to do so because the rule-making involves a 
"military or foreign affairs function." A survey distributed under 
the auspices of the Rulemaking Committee of the Administrative 
Conference of the United States during the summer of 1969 asked 
each federal agency: 

Does your department or agency follow the procedures specified by 
§ 553(b)-(e) for any rulemaking exempted from those provisions by 
§ 553(a)(l)-(2)? If it does, list the particular kinds of rulemaking 
exempted by § 553(a)(l)-(2). Explain. Also list the frequency with 
which it voluntarily follows those requirements for such exempted 
rulemaking, and the specific circumstances under which it does so. 

Responses to this question by those agencies reporting that they 
make rules involving a "military or foreign affairs function"^^ reveal 

37. Legislative History, supra note IS, at 199, 257. 

38. Agencies that responded to the 1969 Survey and indicated specifically that they 
made rules of the sort covered by the "military or foreign affairs function" exemption 
were the Atomic Energy Commission, Department of Agriculture, Department of Com- 
merce, Department of Defense, Federal Power Commission, Post Office Department, 


a pattern with respect to such rule-making. The subsection (a)(1) 
exclusion of these specified types of rule-making from the mandatory 
procedural terms of section 553(b)-(e) means that most rule-making 
of this sort will not be conducted according to these procedures.^' 
And while a number of agencies indicated that they engaged in a 
contrary practice with respect to some rules involving a "military 
or foreign affairs function, "^<> such rule-making seems to account for 
only a small portion of the regulations of this type. 

The procedures actually utilized by administrators with respect 
to regulations involving a "military or foreign aflEairs function" are 
usually inadequate substitutes for those found in section 553(b)-(e). 
The 1969 Survey asked reporting agencies: 

What rulemaking procedures does your department or agency use 
in those cases where its rulemaking is exempted by § 553(a)(I)-(2) 
from the requirements of § 553(b)-(e) and it does not choose, in its 

and Treasury Department. The State Department must obviously be added to this 
group, but a questionnaire response from that agenq: has not yet been received. 

39. Consider, for example, the following responses: Atomic Energy Commission — 
"The AEC does not follow the procedures specified by [section] 553(b)-(e) for the rule- 
making described above, which is exempted from such procedures."; Department of 
Agriculture (Food for Peace Program) — ^"[T]here is no formal published procedure for 
such rulemaking."; Department of Commerce (Domestic and International Business 
Bureau) — ^"No."; Department of Defense — "No."; Post Office Department — does not 
follow those procedures with respect to rules relating to international mail service 
or military mail service; Department of the Treasury (Office of Foreign Assets Control) 
— "does not follow the procedures specified by section 553(b)-(e) for any rulemaking 
exempted from those provisions by section 553(a)."; Department of the Treasury 
(Bureau of Accounts and Treasurer's Office) — "No." 

See also House Comm. on Government Operations, 85th Cong., 1st Sess., Survey 
AND Study of Administration, Organization, Procedure, and PRAcncE in the Federal 
Agencies (Comm. Print 1957) [hereinafter 1957 House Survey], pt. 3 (Department of 
Defense), at 267, 277, 324, 332, 347; pt. 9 (Department of State), at 931 ("The Education 
Exchange Service does not afford direct public participation when not required by 
statute."), 944 (The Office of Special Consular Service "has not afforded public par- 
ticipation in rulemaking when not required by statute to do so."), 946 (The Passport 
Office "does not use advisory groups or invite public participation in rulemaking."), 
951 ("Inasmuch as the publication of visa regulations is considered to be a foreign 
affairs function and, therefore, to be exempt from the requirement of general notice 
of proposed rulemaking, this Office has not established any procedure whereby inter- 
ested parties may formally present their views and briefs."). 

40, The following agencies responded with respect to the indicated programs that 
they usually did not rely on the section 553(a)(1) exemptions: Department of Agricul- 
ture (Regulatory Division) — Regulations under the Defense Production Act of 1950, 
50 U.S.C. App. §§ 2061-168 (1970), and Regulations under the plant and animal 
quarantine acU; Department of Commerce (Office of Direct Foreign Investments) — 
Regulations under Trading with the Enemy Act, 50 U.S.C. App. §§ 1-39 (1970); Fed- 
eral Power Commission — Regulations relating to export and import of electricity and 
natural gas, and construction, operation, or maintenance of certain energy facilities on 
the borders of the United States; Department of the Treasury— Regulations under 
treaties or the Internal Revenue Code dealing with international tax affairs. See also 
1957 House Survey, supra note 39, pt. 3 (Department of Defense, Army Corps of Engi- 
neers), at 286. 


discretion, to follow § 553(b)-(e)? Be as specific as possible. Include a 
concrete example of each of the different kinds of rulemaking pro- 
cedures utilized by your department or agency when it does not fol- 
low § 553(b)-(e) because the rulemaking involved is exempted by 
§ 553(a)(l)-(2). 

Responses indicate that substitute procedures are not always consis- 
tent and frequently do not assure adequate notice to affected parties 
and a sufficient opportunity for their participation. In some cases 
involving rules of the type under consideration here, the agencies 
simply determine the rule they think appropriate and promulgate it, 
without first notifying or consulting with anyone outside of govern- 
ment.^^ In other such cases agencies give notice to, and engage in 
informal consultation with, whomever they deem appropriate under 
the circumstances.^^ 

41. E.g., Atomic Energy Commission — "AEC staff recommendations are presented to 
the Commissioners. These recommendations are then approved, disapproved, or ap- 
proved with modifications. If approved, they are promulgated as rules."; Department 
of Comjnerce (Domestic and International Business Bureau) — The Bureau simply 
"[pjrepares the rule or regulation in the form prescribed by the Federal Register and 
has it published in the register."; Treasury Department (Bureau of Accounts and 
Treasurer's OfiBce) — 

When rulemaking involving one of the parts under consideration is exempted 
by [section] 553(a)(l)-(2), the Department publishes in the Federal Register the 
text of the revision or amendment of the part, prefaced by an introductory state- 
ment of the purpose therefor and of the specific exemption under which it has 
been determined that notice and public procedure thereon are unnecessary, with 
a statement of the immediate or soon impending effective date of the revision or 
amendment and the authority therefor. The foregoing procedure is used in all 
cases of rulemaking exempted by [section] 553(a)(l)-(2). 

See also 1957 House Survey, supra note 39, pt. 3 (Department of Defense), at 292 
(Administration of the Resettlement Acts: "Public participation in the formulation of 
these regulations is not considered necessary or desirable."); pt. 9 (Department of 
State), at 946 (The Passport Office "does not use advisory groups or invite public par- 
ticipation in rulemaking."). 

42. For example, the Department of Defense responded that "in the writing and 
coordination of [exempted] regulations affecting a segment of the public the suggestions 
and views of that segment are sometimes sought." Elsewhere it noted with respect 
to exempted regulations: 

[Such] regulations are promulgated in the Department of Defense in accordance 
with a concept of staff responsibility. Therefore, responsibility of initiating, draft- 
ing, and issuing regulations lies with the staff agency primarily concerned with the 
subject matter of the proposed regulation. Almost all proposed regulations are 
staffed internally for comment by any organizational entity within the Department 
of Defense that has an official concern with its subject matter. On appropriate 
occasion, the views of other Executive Branch departments are also obtained. 
Modifications in the proposed "rule" are made to meet objections and suggestions 
for improvement. Unresolved disagreements between staff elements on the content 
of a regulation are normally forwarded to the approval authority for the regula- 
tion, with recommendations for the resolution of the disagreement through a policy 
decision on the point or points in issue. 

The initiation of a regulation or a regulation change is frequently stimulated 
by criticism, objections, or suggestions by members of Congress, the information 
media, or the public at large. 
Responses from other agencies include: Department of Agriculture (Foreign Agri- 
culture and Special Programs Divisions) — "The Department, in connection with such 
rulemaking, seeks advice from advisory committees composed of representatives of 


Of course, some credit should be given to the appropriate agencies 
for those cases in which they do utilize section 553 procedures for 
the exempted rule-making, or use substitute procedures that in fact 
assure adequate notice to affected parties and a sufficient opportunity 
for their participation. However, the procedures actually utilized for 
much of the rule-making involving a "military or foreign affairs 
function" often result in the following undesirable consequence: per- 
sons who should be apprised of such proposed rule-making, and be 
given an opportunity to participate therein, are not so apprised, or 
afforded an adequate chance to communicate their views. To the 
extent that this occurs without a justification sufficient to warrant 
that result, it should not be tolerated. As noted previously, the rea- 
sons supporting the section 553(b)-(e) requirements for public par- 
ticipation in rule-making are very compelling. The potential damage 
to sound government policy formulation and to private rights is great 
in any case where such participation is not assured. The scope and 
importance of the subsection (a)(1) exemption under examination 
here and the specific reasons advanced for its existence must, there- 
fore, be examined with special care. 

III. The Scope and Practical Importance of 
THE Section 553(a)(1) Exemption 

A Generally 

A few general comments should be made about the linguistic 
form in which subsection (a)(1) is cast. By its terms, section 553(a)(1) 
only excludes rule-making from section 553(b)-(e) "to the extent 
that there is involved ... a military or foreign affairs function of the 
United States." The legislative history emphasizes the "to the ex- 
tent" language, stating that section 553(a) exemptions "apply only 

various segments of the public affected by specific programs and, on occasion, consults 
with representatives of affected members of the public"; Post OflRce Department — 
"Rulemaking by negotiation [with foreign governments] is used most frequently in 
international postal matters, [and with the Department of Defense] in developing reg- 
ulations for postal service to the Armed Forces."; Department of the Treasury — 
"Wherever possible, it is the practice of the Office of Foreign Assets Control to hold 
informal consultations with interested groups or persons before the issuance of rules 
changing aspects of the Control." 

See also 1957 House Survey, supra note 39, pt. 9 (Department of State), at 951 (In 
lieu of adherence to section 553 procedures "it has been the practice of the [visa] office 
to confer with representatives of other public agencies as well as private voluntary 
agencies, and to solicit their comments on proposed regulations. In addition, repre- 
sentatives of the Visa Office meet periodically with representatives of the private volun- 
tary agencies for the purpose of discussing specific visa problems and procedures."), 
931 (In lieu of adherence to section 553 the Education Exchange Service consults with 
the Board of Foreign Scholarships and the Advisory Commission.). 


'to the extent' that the excepted subject matter is clearly and directly 
involved."*' This suggests that where an agency makes some rules 
that come within these introductory exemptions and some rules 
that do not, it may ignore the procedures of subsections (b)-(e) 
in the former cases but must follow them in the latter. Even a single 
scheme of proposed regulations must abide by this principle if it is 
practically divisible into particular provisions that involve the ex- 
cluded functions and ones that do not. The report of the Senate 
Committee on the Judiciary on the bill that was to become the 
Administrative Procedure Act stated that the proposed legislation 

has avoided the mistake of attempting to over-simplify the measure. 
It has therefore not hesitated to state functional classifications and 
exceptions where those could be rested upon firm grounds. In so 
doing, it has been the undeviating policy to deal with types of func- 
tions as such and in no case with administrative agencies by name. 
Thus certain war and defense functions are exempted, but not the 
War or Navy Departments in the performance of their functions.** 

Every federal agency is, therefore, exempted from the usual 
section 553 requirements to the extent that it performs the listed 
functions. Drafters of the statute stated that "[w]here one agency has 
shown that some particular operation should be exempted from any 
particular requirement, the same function in all agencies has been 
exempted."*^ Moreover, the particular purpose or effect of the rules 
involving either of the excepted functions under examination is 
irrelevant since all such regulation-making is excepted from section 
553 by subsection (a)(1). 

On the other hand, rule-making is arguably not exempt under 
subsection (a)(1) unless it "directly" or "clearly and directly" relates 
to the excluded subject matter.*^ This language drawn from the 

43. Legislative History, supra note 13, at 257. See also id. at 199. 

44. Id. at 191. See also id. at 13, reporting a comment made on an earlier draft 
of the APA: 

It is suggested that all functions of the War and Navy Departments as well as of 
the Army and Navy should be exempted. However, since the bill relates to func- 
tions rather than agencies, it would seem better to define functions. All depart- 
ments may, and often do, exercise civil and regulatory powers which should be 
subject to an administrative procedure statute. 
This seems to be the position adopted by Congress when it finally enacted the APA. 

45. Id. at 250. 

46. Id. at 199, 257. "Directly" is the language from the Senate Report on the APA, 
and "clearly and directly" from the House Report. See also Attorney General's Man- 
ual, supra note 13, at 26: 

The exemption for military and naval functions is not limited to activities of the 
War and Navy Departments but covers all military and naval functions exercised 
by any agency. Thus, the exemption applies to the defense functions of the Coast 
Guard and to the function of the Federal Power Commission under section 202(c) 
of the Federal Power Act [16 V£.C. i 824a(c) (1970)]. 


Statute's legislative history suggests that rule-making only indirectly 
or tangentially related to the exempted functions is not to be treated 
as within the exemptions, and that close cases should be treated as 
outside the exemption. There are additional strong reasons to con- 
strue the introductory exceptions narrowly, and to resolve close 
cases by treating them as outside the intended scope of the "military 
and foreign affairs function" exclusion. Most important is the fact 
that the subsection (a)(1) exemptions are cast in the form of broad, 
unqualified exceptions to provisions implementing an important gen- 
eral governmental policy favoring public participation in rule- 
making. Each of these usually operative provisions individually 
contain special, detailed exemptions for peculiar cases. In addition, a 
principal reason for the enactment of the APA was to secure some 
standardization of administrative procedure.*^ Exceptions from any 
of its provisions should, therefore, usually be construed narrowly to 
achieve that result. 

Narrow construction of these exemptions is further supported by 
the statute's legislative history. The Senate and House Reports on 
the APA specifically stated that the "foreign affairs function" exemp- 
tion, for example, "is not to be loosely interpreted. "^^ This led one 
commentator to suggest that "Congress intended general application 
of the APA, subject only to individual instances of exemption when 
foreign affairs functions become implicated in particular proceed- 
ings."^* Our prior discussion may also suggest that despite the usual 
presumption of administrative regularity,^^ the burden of proving 
that particular agency rule-making is exempted from section 553 
because it involves a "military or foreign affairs function" should be 
on the agency. That this is so as a matter of law, however, is less 
than clear. We will return to this subject again later. 

Significantly, this exemption from usual rule-making require- 
ments only attaches "to the extent there is involved ... a military 
or foreign affairs function." This seems a narrower exemption than 
that found in section 553(a)(2) for rule-making wherein "there is in- 
volved ... a matter relating to agency management or personnel or 

47. McFarland, Analysis of the Federal Administrative Procedure Act, in The 
Federal Administrative Procedure Act and the Administrative Agencies 16, 22 (G. 
Warren ed. 1947) [hereinafter G. Warren]. See Wong Yang Sung v. McGrath, 339 U.S. 
33, 41 (1950). See also Legislative History, supra note 13, at 187, 249. 

48. Legislative History, supra note 13, at 199, 257. 

49. Freedman, Administrative Procedure and the Control of Direct Foreign Invest- 
ment, 119 U. Pa. L. Rev. 1, 5 (1970). 

50. 2 K. Davis, supra note 5, § 11.06; 1 F. Cooper, State Administrative Law 355, 
360 (1965). 


to public property, loans, grants, benefits, or contracts." An attempt 
to minimize the significance of the additional "relating to" language 
in subsection (a)(2) of the statute can be made by arguing that there 
is little if any difference between rule-making where there is "in- 
volved" a certain stipulated matter and rule-making where there is 
"involved ... a matter relating to" that stipulated matter. Since there 
is ordinarily a difference in meaning between these phrases, and the 
inclusion of the phrase "relating to" in subsection (a)(2) is unneces- 
sary except as a contrast to subsection (a)(1) in which it is omitted, a 
conclusion that the usage only constitutes a choice of style and does 
not affect content seems difficult to accept. The lesson to be drawn 
from this would seem to be in accord with the legislative history 
referred to earlier. Only rule-making "directly" and intimately in- 
volving a "military or foreign affairs function" is meant to be ex- 
empted from usual rule-making procedures. 

Nevertheless, the language of the section 553(a)(1) exemption is 
very broad. The functions excluded are written in terms easily 
susceptible to wide application. The following discussion will, there- 
fore, attempt to state the main thrust of each of the section 553(a)(1) 
exclusions and to provide examples of rule-making they may be 
deemed to exclude."^^ One last point is relevant, however, to any 
effort to define the scope of these exemptions with precision. 

Rule-making exempted by the "military and foreign affairs 
function" provision of section 553(a)(1) overlaps to a considerable 
extent with the rule-making also exempted from section 553 by the 
"agency management or personnel, or public property, loans, grants, 
benefits, or contracts" provision of section 533(a)(2). Consider, for 
example, rule-making with respect to Department of Defense prop- 
erty used in military functions. Rule-making of that sort is exempted 
from section 553 by both the "military function" exclusion of section 
553(a)(1) and the "public property" exclusion of section 553(a)(2). 
An overlap also exists between the "military function" exemption 

51. Data with respect to the manner in which administrators actually construe these 

exemptions in their everyday affairs have been obtained from the 1969 Survey. One 

question asked: 

What rulemaking does your department or agency engage in that is exempted 
from the requirements of §§ 553(b)-(e) by §§ 553(a)(l)-(2)? Be as specific as possible 
by listing the particular programs you administer whose rulemaking is exempt, and 
for each such progiam the particular part or parts of §§ 553(a)(l)-(2) under which it 
is exempted. Where some rulemaking for a particular progam is exempt and some 
not, indicate which kinds of rulemaking for that program are exempt and which 
kinds are not. Very briefly describe the purpose of each such exempted or par- 
tially-exempted program and provide citations to the statutes under which it 
is administered. 

Most of the illustrations of exempted rule-making used in the following section are 

drawn from the questionnaire responses. 


and the "foreign affairs function" exemption, since many military 
operations of our government are intimately related to, and a part 
of, the nation's foreign affairs program. A consequence of this over- 
lap is that there has been little pressure on the agencies concerned 
or on the courts to define the precise scope of the "military function" 
exemption, for example, as an exclusion with operative effect dis- 
tinguishable and distinct from the exemptions for "agency manage- 
ment or personnel," "public property," "contracts," or "foreign 

When the Department of Defense was asked what proportion of 
its procurement regulations came under each separable exemptive 
portion of section 553(a)(l)-(2), it replied: 

It would be very difficult to allocate the proportion of procurement 
regulations assignable to each of the categories of this question. In 
a fundamental sense [however] all regulations and directives of the 
Department are incident to its essentially military function of na- 
tional defense.^2 

The Department answered in this manner despite the fact that such 
procurement regulations are also obviously exempt from section 553 
as a "matter relating to public . . . contracts" under subsection (a)(2). 
Similarly, the United States Navy Judge Advocate General has stated 
with respect to the Department of the Navy that "matters of agency 
management and personnel are, in the case of this Department, 'mili- 
tary functions' " and that "[t]hose regulations specifically commanded 
of the Secretary of the Navy by Statute fall easily into either the 
exception for military functions or the one for agency management 
or personnel . . . ."^^ 

Since the overlap between the various section 553(a) exemptions 
has resulted in a conspicuous absence of authoritative constructions 
of each of them as separate entities, the following effort to state 
the main thrust of the "military function" exemption and the 
"foreign affairs function" exemption is to some extent speculative. 
After an examination of the legislative history and the language of 
each exemption, some possible rules of construction will be suggested 
by which their individual scope may be defined. Illustrations of rule- 
making arguably within the ambit of each exemption will then be 
supplemented by an analysis of the exclusion's significance, measured 
in terms of its practical exemptive impact. For definitional purposes 
the following discussion will assume that the particular exemptions 

52. 1957 House Survey, supra note 39, pt. 3 (Department of Defense), at 278. 

53. 1969 Survey Response (Department of Defense). 


under examination are exclusive; their scope will be examined with- 
out regard to the fact that some rule-making within their ambit 
may also be exempt under other portions of section 553(a). 

B. "Military Function" 

Rule-making is exempted by subsection (a)(1) from the require- 
ments of section 553(b)-(e) "[t]o the extent that there is involved . . . 
a military . . . function of the United States." It should be em- 
phasized that section 553(a)(1) does not exempt all rule-making to 
the extent the "military" is involved. What is exempted, rather, is 
rule-making that implicates "military functions." Rule-making in- 
volving any "function" that is "military" is entirely excluded from 
the requirements of the rule-making provision. Whosoever performs 
the "function" that is "military" is exempt to the extent of that 
performance. Obviously, there is a substantial difference between an 
exemption for rule-making "clearly and directly" involving the "mili- 
tary," and an exemption for rule-making "clearly and directly" 
involving a "military function." As noted earlier, the legislative 
history of the statute demonstrates that this distinction was fully 
understood and relied upon in drafting the APA. The drafters in- 
tended to deal with "types of functions as such and in no case with 
administrative agencies by name."" 

The term "military" is defined by Webster's as "of or relating 
to, soldiers, arms, or war . . . belonging to, engaged in, or appropriate 
to the affairs of war . . . performed or made by armed forces. "'''' 
Random House defines military as "of, for, or pertaining to the 
army, armed forces, affairs of war, or a state of war" or "of or per- 
taining to soldiers . . . performed by soldiers . . . befitting, charac- 
teristic of, or noting a soldier. "^^ The term "function" may be 
defined as "the action for which a person or thing is specially fitted, 
used, or responsible or for which a thing exists: The activity ap- 
propriate to the nature or position of a person or thing." "Function" 
signifies the "acts, activity, or operations expected of a person or 
thing by virtue of his or its nature, structure, status, or position.""' 

The definitional problem comes to this. The term "military 
function" might encompass rule-making "clearly and directly" in- 
volved in (1) matters specially fitted for, appropriate to, or expected 

54. Legislative History, supra note 13, at 191. See also id. at 13. 

55. Webster's Third New International Dictionary 1433 (1966) [hereinafter 

56. Random House Unabridged Dictionary of the English Language 909 (1966). 

57. Webster's, supra note 55, at 920-21. 


of the armed forces in light of their peculiar nature and qualifica- 
tions, or (2) matters specially fitted for, appropriate to, or expected 
of war and preparation for war generally; or it might encompass 
both. Some things "clearly" expected of, appropriate to, or specially 
fitted for war or preparation for war would not be "clearly" expected 
of, appropriate to, or specially fitted for the armed forces as such; 
and some things "clearly" expected of, appropriate to, or specially 
fitted for the armed forces would not be considered as such for war 
or preparation for war. For example, it may be argued that national 
rationing is "directly" involved in, specially fitted for, and ap- 
propriate to the waging of war. Yet, the armed forces are not specially 
suited, by their peculiar nature and qualifications, to create or 
administer such a program; nor is it "clearly" an appropriate activity 
for the armed forces as such. 

There is some reason to argue that the term "military function" 
was used exclusively in the first sense noted above. Congress could 
have, had it so intended, used the term "war function" or "national 
defense function," rather than "military function," if it wished to 
indicate unambiguously a broader range of rule-making activity to 
be exempted than that usually expected of, or deemed peculiarly 
appropriate to the armed forces. Furthermore, the more colloquial use 
of the term "military" probably denotes something related to the 
armed forces rather than something related to war or preparation for 
war generally. 

In construing the term "military function," of what relevance, if 
any, is the fact that section 551(1) (F)-(H) specifically exempts from 
the entire APA "courts martial and military commissions," "military 
authority exercised in the field in time of war or in occupied terri- 
tory," and functions conferred under a number of enumerated 
statutes relating to war and national defense matters?^^ Do these ex- 
press exclusions from the entire Act suggest anything about the pre- 
cise scope of the exemptions for matters involving a "military func- 
tion" found in both the rule-making and the adjudication provi- 
sions?^^ Some clues may be drawn from a more complete excursion 
into the legislative history of the APA. 

A provision in an earlier draft of the APA would have expressly 
excluded from almost the entire Act "war and defense functions" 
arising out of the Second World War, and scheduled to terminate 
shortly thereafter. The provision (section 13) stated: 

58. 5 U.S.C. §§ 551(1)(F)-(H) (1970). 

59. 5 U.S.C. § 554(a)(4) (1970). 


Except as to the requirements of section 3 [the freedom of in- 
formation section], there shall be excluded from the operation of 
this Act war and defense functions which by law expire on the ter- 
mination of present hostilities, within any fixed period thereafter, 
or before July I, 1947, as well as those conferred by the following: 
Selective Training and Service Act of 1940; Contract Settlement Act 
of 1944; Surplus Property Act of 1944 [and so forth]. «« 

This section was to be in addition to the specific "military function" 
exemptions from the rule-making and adjudication provisions.*'^ It 
was suggested, however, that section 13 should be deleted. As a 
substitute, the definition of "agency" in section 2(a) of the proposed 
act should be amended to expressly exclude from the Act's coverage 
"war and defense functions which by law expire on the termination 
of present hostilities," and "courts martial, military or naval author- 
ity exercised in the field in the time of war or in occupied territory, 
and the functions conferred by the following statutes." The purpose 
of this suggestion was "to remove any question of the application of • 
the [entire APA] to purely military functions."^^ 

The result of the above suggestions with respect to an earlier 
version of the APA was that proposed section 2(a) was amended so 
that, when finally adopted by Congress, it provided: 

Except as to the requirements of section 3 [the freedom of informa- 
tion section], there shall be excluded from the operation of this Act 
... (2) courts martial and military commissions, (3) military or naval 
authority exercised in the field in time of war or in occupied territory, 
or (4) functions which by law expire on the termination of present 
hostilities, within any fixed period thereafter, or before July 1, 1947, 
and the functions conferred by the following statutes: Selective 
Training and Service Act of 1940; Contract Settlement Act of 1944; 
Surplus Property Act of 1944.^^ 

The addition of section 2(a)(2) relating to courts martial not "exer- 
cised in the field in time of war or in occupied territory" might have 
been the result of doubt about whether the term "military function" 
used later in the Act would clearly cover such tribunals in those 
cases. A suggestion had been made with respect to an earlier draft 
of what has now become section 553(a)(1) that "[t]he phrase 'military 

60. Legislative History, supra note 13, at 43. 

61. See id. at 17, 21. 

62. Id. at 43-44. 

63. Administrative Procedure Act of 1946, ch. 324, § 2(a), 60 Stat. 237 (codified at 
5 U.S.C. § 551(1) (1970)). 


functions' should be clarified, particularly for the purpose of includ- 
ing within it all proceedings relating to court martial."^* 

It may be contended that the exclusionary term "military func- 
tion" that appears in the rule-making and adjudication provisions of 
the APA is congruent with the much more specific exemptions that 
were finally included in APA section 2(a)(2)-(4) "to remove any 
question of the application of the [entire APA] to purely military 
functions." There are, however, serious objections to this approach to 
construing the term "military function" as it is used in section 
553(a)(1). The legislative history relied on is at best muddy in mean- 
ing and small in quantity. There is no evidence that the several 
specific exclusions from the entire APA found in its section 2 (a) (2) -(4) 
were intended to constitute an exclusive and exhaustive catalogue of 
"military functions." Any effort to confine the meaning of "military 
function" to those functions excluded by section 2(a)(2)-(4) is also 
at odds with the normal meaning of the former term. Most things ex- 
cluded from the APA by section 2(a)(2)-(4) are clearly "military 
functions"; but it is equally clear that the term "military function" 
has a broader connotation than, for example, merely courts martial 
and orders of military commanders in the field in time of war. 

In addition, if the enumerated section 2(a)(2)-(4) exclusions were 
meant to be exhaustive of all "military functions," why include the 
more generally phrased, therefore potentially broader scoped, "mili- 
tary function" exemptions in the rule-making and adjudication pro- 
visions of the same act? Those latter exclusions would have been 
superfluous if section 2(a)(2)-(4) already excluded from virtually the 
entire Act, including the rule-making and adjudication provisions, all 
that the term "military function" was meant to exclude. The term 
"military function" must, therefore, have been intended to encom- 
pass more than the specifically enumerated functions listed in APA 
section 2(a)(2)-(4), but not necessarily to include all those functions. 
The most likely reason for adding the courts martial and military 
field authority in time of war exclusions to the definition of "agency" 
in section 2(a) was that the drafters deemed it necessary to exclude 
those particular "military functions" from all provisions of the APA 
except section 3 — the freedom-of-information provision. Standing 
alone, the "military function" exemptions of APA sections 4 and 5 
would have excluded those particular enumerated functions from 

64. Legislative History, supra note 13, at 17. See also id. at 22, to the same effect 
with regard to the same exemption in the adjudication section of the APA. 


only the rule-making and adjudication provisions of the Act but not, 
for example, from the judicial review provision, section 10.^" 

A further point should be made with respect to the exclusion of 
other war-related functions from virtually the entire Act by APA 
section 2(a)(4) — functions that would expire at the termination of the 
Second World War, or soon thereafter, and functions conferred by 
the Selective Training and Service Act of 1940, Contract Settlement 
Act of 1944, and Surplus Property Act of 1944. It is certainly not 
apparent that when the exemptions for these enumerated subjects 
were added to the proposed APA section 2(a) definition of "agency," 
they were all deemed to be "military functions" as such. Despite the 
one shred of evidence to the contrary,®^ the legislative history is not 
clear that every function that would expire at the termination of the 
Second World War or within any fixed period thereafter, or every 
function conferred by the specifically enumerated war statutes, was 
viewed as a "military function." 

Not all "war or defense"^^ functions of the type listed in 2(a)(4) 
are necessarily "military functions," since many may be only in- 
directly or tangentially linked to a mission specifically fitted for, 
appropriate to, or expected of the armed forces. Was civilian price 
control and rationing administered by the OPA during the Second 
World War, and scheduled by law to expire at its termination or at 
a specified date thereafter,^^ a "military function"? Probably not, if 
we resort to the more probable meaning of "military," because it did 
not "clearly and directly" involve activities normally deemed within 
the special capacity and expertise of the armed forces because of their 
peculiar attributes or nature. 

The real reason for the exemption of these particular functions 
in section 2(a)(4) appears to have been something other than a con- 
cern that all "military functions" should be exempted from the Act. 
"[I]t would take at least a year for any adequate [Administrative 
Procedure Act] proposal to be placed in operation."^^ As a result, 

65. Section 10 of the original APA did not separately define "agency" as does its 
current codification, 5 U.S.C. § 701 (1970). The definition found in section 701(b)(1) 
includes an identical reproduction of that found in section 551(1)(F)-(H). 

66. See text accompanying note 62 supra. 

67. Legislative History, supra note 13, at 43. Section 13 of the proposed Act used 
the term "war and defense functions" to describe the specific functions later exempted 
by APA § 2(a)(4). 

68. Emergency Price Ctontroi Act of 1942, ch. 26, 56 Stat. 23. 

69. Legislative History, supra note 13, at 43. See also Freedman, supra note 49, 
at 6: "Prior to 1966, the APA excluded from its reach 'functions which by law expire 
on the termination of present hostilities.' . . . [T]he revision of the APA in 1966 
resulted in the deletion of the phrase 'functions which by law expire on the termina- 


"war agencies" could not comply with the requirements of this 1946 
statute, or it was believed that they should not be put to the expense 
of complying with it in carrying out these particular enumerated 
functions, since these functions would expire shortly. A decision was 
made on this basis, therefore, to exempt the specific functions in 
question from virtually the entire Act — without any implication that 
they were or were not "military functions." 

In light of this discussion, it appears that section 2(a) of the APA, 
now section 551(1), does not help to define, in any more precise 
way, the scope of the term "military function" as it is used in section 
553(a)(1). It might also be worth considering, however, whether lan- 
guage used in the 1967 revision of the freedom-of-information pro- 
vision of the APA,'^*' section 552, is relevant to the construction of 
"military function" in the rule-making provision. The new freedom- 
of-information provision contains an exemption for matters that are 
"specifically required by Executive order to be kept secret in the 
interest of the national defense or foreign policy."^^ This provision 
was enacted subsequent to the APA and, therefore, is not of direct 
relevance to any original congressional intention with respect to the 
scope of the term "military function" used in the rule-making and 
adjudication provisions. It may, however, indicate Congress' more 
recent impression as to the meaning of that term. 

Why, for instance, did Congress exempt from section 552 matters 
that are "specifically required by Executive order to be kept secret 
in the interest of national defense"? If section 553(a)(1) language were 
used. Congress would have exempted from the new freedom-of-in- 
formation provision matters that are "specifically required to be kept 
secret by Executive order in the interest of the proper performance 
of military functions." Did Congress consider what, if any, difference 
in scope inhered in the term "military function" as compared to the 
term "national defense" or "national defense function"? Nothing has 
been found in the legislative history to suggest that this particular 
question was even considered.'^^ 

Indeed, it seems reasonably clear that in choosing language for 
the above exemption from the freedom-of-information provision, 
Congress was exclusively concerned with assuring some conformity to 

tion of present hostilities.' The Reviser's Notes explain that the phrase was omitted 
'as executed.' " See 5 U.S.C. § 551, Historical and Revision Notes (1970). 

70. Act of June 5, 1967. Pub. L. No. 90-23, 81 Stat. 54 (codified at 5 U.S.C. § 552 

71. 5 U.S.C. § 552(b)(1) (1970) (emphasis added). 

72. See. e.g.. U.K. Rep. No. 1497. 89th Cong., 2d Sess. (1966). 


a pre-existing Executive Order — more precisely, Executive Order 
10501 of November 5, 1953, entitled "Safeguarding Official Informa- 
tion in the Interest of the Defense of the United States."'^ This Order 
stated that government information requiring "protection in the 
interests of national defense" was to be limited to three classification 
categories: top secret, secret, or confidential. It went on to provide: 
"No other designation shall be used to classify defense information, 
including military information, as requiring protection in the inter- 
ests of national defense, except as expressly provided by statute."^* 
This seems to suggest that "national defense," as used in the Execu- 
tive Order, was understood to be broader in scope than the term 
"military." Further possible corroboration exists in the context of 
this Executive Order for the notion that "national defense" con- 
noted a broader range of matters than the term "military." The in- 
formation described in the Order as requiring protection in the 
interests of "national defense" included information the disclosure 
of which might lead to "a war, or the compromise of military or 
defense plans, or intelligence operations, or scientific or technological 
developments vital to national defense."^^ 

Since the "national defense" exclusion from the freedom-of-in- 
formation provision was based upon the above Executive Order, there 
is reason to assume that when Congress enacted section 552, it used 
the term "national defense" in the same way — as a broader notion 
than "military," the latter, however, being assumed to be included 
within the former. Webster's defines "defense" as "capability of re- 
sisting attack . . . practice or manner of self protection. "^^ The provi- 
sion of grants to educate college students in fields that are helpful to 
the capacity of our country to protect itself and resist attack involves 
a "national defense" function; but it is not likely to be considered 
as involving a "military function" within the meaning of section 
553(a)(1). Similarly, construction of the interstate highway system 
or the general stockpiling of strategic raw materials may be viewed 
as part of the "national defense" function but should not properly 
be deemed to involve a "military function." These examples do not 
"clearly" involve an activity expected of, appropriate to, or specially 
suited for the armed forces because of their peculiar attributes or 
qualifications; they do, however, "clearly" involve our capacity to 
resist attack and our manner and practice of self protection. 

73. Id. at 9-10. 

74. Exec. Order No. 10501. § 1. as amended, 3 C.F.R. 306 (1972) (emphasis added). 

75. Exec. Order No. 10501. § 1. 3 C.F.R. 306. 

76. Webster's, supra note 55, at 591. 


This discussion seems to suggest two things. First, as a matter 
of common usage and understanding, the term "national defense" 
may easily be applied to a broader scope of governmental activity 
than the term "military function." Second, Congress probably did 
not directly consider the relationship between the term "national de- 
fense," which appears in the freedom-of-in formation provision, and 
the term "military function," which is used in the rule-making and 
adjudication provisions. Its use of a term in section 552 that is incon- 
sistent with that used to exempt some related matters in the rule- 
making and adjudication provisions seems, therefore, to be of little 
significance when viewed in isolation. However, in adopting section 
552 Congress probably did intend the term "national defense" to be 
broader than the term "military function" because it desired to adopt 
the principles embodied in an existing executive order which 
seemed to have recognized such a distinction. This indicates that in 
1967, when Congress amended the already recodified APA, it would 
probably have read the section 552 term more expansively than the 
section 553(a)(1) term. 

This conclusion is, of course, not mandatory. Both at the time 
the APA was adopted in 1946 and at the time the new freedom-of- 
information provision was added in 1967, Congress might have be- 
lieved the terms "national defense" and "military" function to be 
fungible. Certainly a number of federal agencies have thought that 
these terms are synonymous ;^^ and there is no authoritative judicial 
construction of the terms to the contrary. 

In this connection it should be noted that the precise exemptive 
language used in the rule-making provision of the original APA, 
section 4,'^^ and in the adjudication provision, section 5,'^^ was any 
"military, naval or foreign affairs function." The APA was recodi- 
fied in 1966 without any intention of changing its substance.^" At that 
time the word "naval" was omitted in both provisions because it was 
considered to be included within the term "military. "^^ In omitting 
the term "naval" on this basis Congress obviously meant to reject any 
notion that the word "military" meant "of or related to the army — 
distinguished from naval. "^^ Obviously, also. Congress believed 

77. See, e.g., text accompanying notes 90-93 & 110 infra. 

78. Administrative Procedure Act of 1946, ch. 324, § 4, 60 Stat. 238, as amended, 5 
U.S.C. § 553 (1970) (emphasis added). 

79. Administrative Procedure Act of 1946, ch. 324, § 5, 60 Stat. 239, as amended, 5 
U.S.C. § 554 (1970) (emphasis added). 

80. Act of Sept. 6, 1966, Pub. L. No. 89-554, 80 Stat. 383. 

81. See 5 U.S.C. § 553, Historical and Revision Notes (1970). 

82. Webster's, supra note 55, at 1433. 


that the term "naval" used in section 4 of the original APA and 
deemed by it to be included within the term "military," was in- 
tended solely in its military sense — "of, relating or belonging to, 
connected with or used in a navy,"*^ and not in its general maritime 
sense — "of or relating to ships or shipping" generally.^* 

It has been asserted that since "the statutes governing the Coast 
Guard constitute it a military organization . . . the authorized rules 
for its governance would clearly fall in the first category" of section 
553(a)(1) — ^rules involving a "military function. "^'^ Similarly, a 
"special notice" or rule issued by the Coast Guard that restricted 
access to a portion of a harbor during the launching of a Polaris 
missile firing submarine of the United States Navy was held to be 
"within the exception to [section 4 of the APA] for 'any military, 
naval, or foreign affairs function of the United States.' "^^ These 
examples seem to be consistent with a construction of the term 
"military function" that is narrower than the term "national de- 
fense" function. However, in a statement regarding a draft of the 
proposed APA section 4, the Attorney General of the United States 
stated: "The term 'naval' in the first exception clause is intended to 
include the defense functions of the Coast Guard and the Bureau of 
Marine Inspection and Navigation. "^^ This seeming equation of 
"defense function" with "military function" may be of no signifi- 
cance, or it may suggest that any attempt to distinguish between 
these terms here is improper. 

Of interest in this connection is the holding of McBride v. Ro- 
land.^^ It suggests that a denial by the Coast Guard Commandant 
of a special validation endorsement of the plaintiff's merchant 
mariner's documents on the grounds that his presence aboard a 
civilian ship would be inimical to the national security was not 
governed by the APA because this decision came within the excep- 
tions of sections 4 and 5 for "naval or military affairs."®^ The func- 
tion being performed by the Coast Guard in this circumstance was 
a "national defense" function. But did it "clearly and directly" in- 

83. Webster's, supra note 55, at 1508. 

84. Id. 

85. 1957 House Survey, supra note 39, pt. 10 (Department of the Treasury), at 1017. 
See also United States v. Aarons, 310 F.2d 341, 347 (2d Cir. 1962) (Coast Guard is a 
military service). 

86. 310 FJ2d at 348 n.3. 

87. Legislative History, supra note 13, at 225 (emphasis added). 

88. 248 F. Supp. 459 (S.D.N.Y. 1965). 

89. 248 F. Supp. at 465. 


volve an activity specially fitted for, appropriate to, or expected of 
the armed forces as such, because of their peculiar nature, attributes, 
or qualifications? Is the exclusion of seamen from civilian ships in 
the interest of national security really an activity of this type? Per- 
haps so, in light of the fact that both the Navy and the Coast Guard 
must be considered armed forces. But if this conclusion is wrong, 
McBride would suggest that the scope of the term "military func- 
tion" may be congruent with the potentially broader term "defense 

A number of agencies seem to have taken the view that "military 
function" is synonymous with "national defense function" or "war 
function." Agencies have read the section 553(a)(1) term "military 
function" as applying to anything involving, and not necessarily 
"clearly and directly," activities expected of, appropriate to, or 
specially fitted for war or preparation for war generally, as well 
as activities expected of, appropriate to, or specially fitted for the 
armed forces as such because of their peculiar nature, structure, or 
capacity. In addition, agencies have sometimes construed "military 
function" to mean anything involving or affecting the armed forces, 
rather than as anything "clearly and directly" involving an armed 
forces "junction." Consequently, there is no general agreement as to 
the precise scope of the "military function" exemption. The follow- 
ing examples demonstrate, however, that in practice section 553(a)(1) 
is construed in a number of different ways — and frequently very 

For instance, the Federal Power Commission reported in 1969: 

The Commission's functions which appear to come within the 
"military function" exemption of 5 U.S.C. § 553(a)(1) include: (1) its 
emergency power pursuant to section 202(c) of the Federal Power 
Act to order temporary connection of electric facilities and to re- 
quire generation, delivery, interchange or transmission of electric 
energy; (2) those under section 16 of the Federal Power Act which 
authorizes the United States to take temporary possession of licensed 
hydroelectric projects for the purpose of manufacturing nitrates, ex- 
plosives or munitions of war; (3) to the extent that a war emergency 
is involved, the Commission's authority under section 7(c) of the 
Natural Gas Act to issue temporary certificates of public convenience 
and necessity to construct and operate facilities of a natural gas 
company. With respect to these "military functions", the Commission 
would agree that the present policy of the Administrative Procedure 
Act exempts it from the rulemaking requirements of 5 U.S.C. § 553 
(b)-(e), since in time of war, the public interest may require the use 
of certain hydroelectric facilities for military purposes, the alloca- 


tion of electric or natural gas energy to meet emergency demands 
and/or the reestablishment of disrupted utility services with the ut- 
most dispatch.^" 

Similarly, the Department of Agriculture has noted that "the only 
rulemaking [in which it engages] that might involve a 'military 
function' as mentioned in 5 U.S.C. 553(a)(1), would be, possibly, 
regulations under the Defense Production Act [of 1950]" dealing 
with expansion of civilian productive capacity to provide for "na- 
tional defense."^^ In 1969 the Post Office Department claimed that 
in the "implementation of the statutes relating to postal services for 
the Armed Forces," its rule-making was exempt from section 553 by 
the subsection (a)(1) "military function" exclusion.^^ ^^d the 
Atomic Energy Commission stated that its "rulemaking relating to 
permits for Access to Restricted Data . . . insofar as Category C-24 
'Isotope Separation — Gas Centrifuge Method' is concerned . . . [is] 
exempt under § 553(a)(1) as involving 'a military . . . function.' "®^ 
Of more importance is the Department of Defense's position as 
to the meaning of the term "military function." Obviously that 
exemption has its most practical relevance to the activities of this 
particular agency. Recall that the legislative history of the APA sup- 
ports the assumption that some of the functions performed by the 
Department of Defense are not "military functions" within the 
meaning of section 553(a)(1) and, therefore, are not excluded on 
that basis from section 553.^^ Such a nonmilitary function per- 
formed by this Department might be the domestic flood control and 
protection of navigable waters activities conducted by the Army 
Corps of Engineers.®^ The domestic activities of this sort under- 
taken by the Corps do not "clearly and directly" involve activities 
expected of, appropriate to, or specially fitted for the armed forces 
as such^* because of their special nature, qualifications, or attri- 
butes. In 1957 the Department of Defense tacitly admitted that not 
all activities of the Corps of Engineers were "military functions." It 

90. 1969 Survey Response. The statutory authorizations to which the Commission 
referred are codified at 16 U.S.C. §§ 809, 824a(c), and 15 U.S.C. § 7I7f(c) (1970) respec- 
tively. See also 1941 Hearings, supra note 20, pt. 2, at 502-03. 

91. 1969 Survey Response. The Defense Production Act of 1950 is codified at 50 
U.S.C. App. §§ 2061-168 (1970). 

92. 1969 Survey Response. 

93. 1969 Survey Response. Cf. 10 C.F.R. § 2.905 (1972). 

94. See note 44 supra and accompanying text. 

95. See, e.g., 33 U.S.C. §§ 701-09a (1970). 

96. Most of the personnel of the Corps are not even members of the armed forces. 
The exemption, however, is for "military functions" and not "the military." 


Many of the rules considered herein [relating to the Corps of En- 
gineers] are of military or naval significance. Since the procedures 
in paragraph 4 of the Administrative Procedure Act are followed in 
all cases, there has been no need to characterize particular rules as 
involving or not involving military or naval functions.^^ 

Of course, there is no doubt that if strategic military planning 
constitutes rule-making within the meaning of the APA, it is ex- 
empted from section 553 as a "military function" under subsection 
(a)(1). Nothing is more plainly adapted to, specially fitted for, or 
appropriate to the armed forces because of their peculiar qualifica- 
tions or attributes than planning "battlefield" strategy in the event 
of armed hostilities. So, too, any rules concerning the organization, 
deployment, or use of the armed forces as such are plainly "military 

Beyond this, it has been alleged, however, that in light of the 
mission of the Department of Defense as a whole, "the rule-making 
provisions do not apply to the usual functions of the [Defense] De- 
partment"^^ or to the "typical" functions of that Department.^^ The 
Department has also maintained that in "a fundamental sense all 
regulations and directives of the Department [of Defense] are inci- 
dent to the essentially military function of national defense. "^^^"^ 
Therefore, the Department of Defense would probably take the 
view that, for example, all of the following regulations involve 
"military functions" and are consequently exempt from section 553: 

(1) The Armed Services Procurement Regulation; (2) claims and 
litigation procedures; (3) distribution of surplus property; (4) the 
correction of military records; (5) support of military dependents 
and paternity claims; (6) labor surplus area set-asides; (7) indebted- 
ness, financial transactions, and commercial affairs of military per- 
sonnel; (8) payments under the Missing Persons Act and death bene- 
fits; and (9) standards of conduct for civilian employees.^^i 

While section 553(a)(2) now provides exemptions for most, if not 
all, of the above activities, repeal of those exemptions for rules re- 
lating to "public property, loans, grants, benefits, or contracts" 
would almost surely induce the Department of Defense to rely on 
the "military function" exclusion in an effort to reach a result it 

97. 1957 House Survey, supra note 39, pt. 3 (Department of Defense), at 286. 

98. Reich, Rulemaking Under the Administrative Procedure Act, in G. Warren, 
supra note 47, at 492, 498 (emphasis added). 

99. Reich, Administrative Procedure Act: Analysis of its Requirements as to Rule- 
making," 33 A.B.A.J. 315. 317 (1947). 

100. See text accompanying note 52 supra (emphasis added). 

101. 1969 Survey Response. 


desires — the continued exemption of all such rule-making from 
section 553. 

Indeed, the Department of Defense already appears to have taken 
this view. The Senate Committee on the Judiciary recently queried 
that Department with respect to its attitude toward a bill — S. 1413^*2 
— that would have repealed the section 553(a)(2) exemptions for 
rule-making relating to "public property, loans, grants, benefits, or 
contracts." The Department's reply indicates a belief that virtually 
all of its rule-making is exempted from section 553 by the "military 
function" exemption. It commented: 

Since S. 1413 would leave intact the current exemption in 5 U.S.C. 
553(a)(1) for "a military or foreign affairs function of the United 
States," it appears that the Department of Defense would not be 
affected by the proposed legislation. ... If, however, notwithstanding 
5 U.S.C. 553(a)(1), S. 1413 should be so intended and construed as to 
apply to rulemaking concerning contracts and the other enumerated 
matters of this department, the Department of Defense is strongly 
opposed to S. 1413.103 

More specifically, the Department has stated that the subsection 
(a)(1) "military function" exemption excludes from usual pro- 

the issuance of regulations governing such widely diverse military 
functions as the operation of the Reserve Officers' Training Program 
in civilian education institutions, the determination and designation 
of vital industrial facilities in support of military mobilization pro- 
duction programs, the implementation of the defense scientific and 
technical information program, . . . [and] the choice between com- 
mercial or military transportation facilities for military supplies or 

It went on to note that "[s]uch regulations govern military func- 
tions which do not appear to fall within the exception for 'any 
matter relating to internal management or personnel of an 
agency.' "^"^ 

The Defense Department has taken the position that rule-making 
relating to discharge review boards and boards for the correction of 

102. 92d Cong., 1st Sess. (1971). See notes 7-10 supra and accompanying text. 

103. Letter from Fred Buzhardt, General Counsel, Department of Defense, to 
Senator James Eastland, Jan. 18, 1972. 

104. Hearings on S. 1663 Before the Subcomm. on Administrative Practice and Pro- 
cedure of the Senate Comm. on the Judiciary, 88th Cong., 2d Sess. 493 (1964) [herein- 
after S. 1663 Hearings^. 

105. Id. at 493-94. The present language of section 553(a)(2) is "agency management 
or personnel." The language quoted is from an analogous provision that was to be 
included in S. 1663. 


military records involves "military functions."^*'® Similarly, the De- 
partment has stated that all rules relating to the administrative 
settlement of personal injury and property damage claims are ex- 
empt because they "involve military functions in the sense that the 
claims are generated by personnel of the military departments within 
the scope of their employment."^"^ The Department has also main- 
tained that all rules relating to administration of the Resettlement 
Acts governing purchase and acquisition of land for the military, and 
resettlement of previous owners, are exempt from usual rule-making 
requirements because "[t]hese rules involve military and naval func- 
tions in that the rules apply to certain acquisitions of land by the 
military departments."^^^ 

Similarly, it has been suggested that rule-making concerning 
property owned by the Department of Defense and used in the 
performance of military functions, and rule-making involving "vir- 
tually all contracts for military procurement," would be excluded 
from section 553 under the "military function" exemption of sub- 
section (a)(l).^^ The Department of Defense has specifically stated 
that it would be "difficult to allocate the proportion of procure- 
ment regulations assignable" to each of the categories specifically ex- 
empted by section 553(a)(l)-(2) because all regulations of the Depart- 
ment are "incident to its essentially military function of national 
defense. "^^"^ It has also been asserted that rule-making dealing with 
"United States military surplus [property] located abroad" is exempt 
from section 553 because it involves a "military function" within 
the meaning of subsection (a)(l)."^ Less debatable, of course, is 
the assertion that rules "pertaining to access to a secret missile 
base" would be deemed to involve a "military function."^^^ 

Some of the previous claims as to the scope of the exemptive 
provision in question are at best dubious. As suggested earlier in 
this section, the term "military function" should be construed as 
encompassing only those activities or operations, by whoever per- 
formed, that are specially tailored for, appropriate to, or expected 
of the armed forces as such because of their peculiar nature, capaci- 
ties, or qualifications. Only rule-making "clearly and directly" in- 

106. 1957 House Survey, supra note 39. pt. 3 (Department of Defense), at 332, 346. 

107. Id. at 324. 

108. Id. at 292. 

109. Bonfield, supra note 7, at 312. 

110. 1957 House Survey, supra note 39, pt. 3 (Department of Defense), at 278. 

111. Id., pt. 2 (Department of Commerce), at 128. 

112. S. 1663 Hearings, supra note 104, at 679. 


volving such activities should be deemed excluded by section 
553(a)(1) as a "military function." There is, however, as illustrated 
by at least some of the examples cited above, disagreement over the 
correctness of this construction by those who are charged with ap- 
plying section 553. 

Even if we assume the soundness and acceptability of the con- 
struction of "military function" proffered here, promulgation of the 
Armed Services Procurement Regulations (ASPR), for instance, 
may arguably be deemed such a function. However, one commen- 
tator has suggested that these regulations are not excludable as sec- 
tion 553(a)(1) "military functions": 

The ASPR aie not peculiar to military functions. They merely 
represent a comprehensive restatement of those policies thought to be 
necessary in applying sound business practices to the acquisition of 
goods and services by the military departments of the Government; 
they are not tailored to the necessities of military operations as such. 
The ASPR are no more entitled to exemption as a "military function" 
than is the rather skimpy State Department Procurement Regulation 
to be excluded from section 4's requirements as a "foreign afiEairs 

This view seems questionable for several reasons. It is true that 
rule-making for the acquisition, use, and disposal of government 
property generally does not involve an activity specially fitted for, 
appropriate to, or expected of the armed forces as such because of 
their peculiar nature, capacities, or qualifications. However, that 
characterization views rule-making of this type at an unduly high 
level of generalization and abstraction. A more realistic formula- 
tion of the relevant question might be: Does rule-making for the 
acquisition, use, and disposal of property and materiel needed by 
the armed forces to perform their admittedly "military functions" 
"clearly and directly" involve such a function? 

The acquisition, superintendence, and disposal of combat weap- 
ons, weapons systems, and other materiel peculiarly designed for use 
by combat forces and their support units is unique to the armed forces. 
Acquisition of materiel of this type frequently presents special prob- 
lems and peculiar requirements. In many cases, the same may also be 
said about other materiel specifically required by the armed forces 
in their performance of "military functions." No doubt, this is one 
of the reasons for Armed Services Procurement Regulations, rather 
than one single set of General Services Administration regulations 
governing all procurement of property and materiel by every agency 

lis. Grossbaum, supra note 1, at 260. 


of the United States Government — including the armed forces. 
J)epartment of Defense rules tailored to provide for the acquisition 
of these kinds of things seem, therefore, "clearly" to involve an ac- 
tivity specially appropriate to, expected of, or fitted for the armed 
forces by virtue of their peculiar nature, qualifications, or capacities. 
The armed forces have special problems in procurement of materiel 
for use in admittedly "military functions"; therefore, they have 
special competence and are specially suited to deal with that pro- 
curement process, which means that ASPR may be "clearly and 
directly" involved in a "military function." 

To be sure, an argument to the contrary may be made: The 
acquisition, as opposed to use, of the property and materiel neces- 
sary to create and maintain a governmentally organized armed 
fighting force is not specially fitted to, appropriate for, or ex- 
pected of the armed forces by virtue of their peculiar capabilities. 
Procurement as such is not a "military function"; nor is procure- 
ment for the armed forces generally, or procurement of specially 
designed military hardware specifically, such a function. In fact, the 
performance of none of these tasks requires any special attributes or 
qualifications peculiar to the armed forces. 

This last factual assumption is very dubious, however, especially 
in the context of materiel designed specifically for combat use or 
for other peculiar requirements of the armed forces. It may also be 
dubious, though less so, in the context of procurement for the 
armed forces of materiel generally; peculiar problems with which 
the armed forces are specially fitted to deal may arise out of the 
unusual needs of the armed forces in the acquisition of even com- 
mon materials and equipment. The need for special speed and 
peculiarly large quantities are examples. All of the above, however, 
are debatable issues upon which reasonable men may disagree. 

Nevertheless, the conclusion that ASPR does not "clearly and 
directly" involve a "military function" is also difficult to accept for 
other reasons — the general terminology of that particular exemp- 
tive term, and the very direct involvement of the procurement 
process for materiel in the successful execution of other indisput- 
able "military functions." One may agree with the undesirability of 
the "military function" exemption generally, or the exemption of 
ASPR particularly, without necessarily concurring in the optimistic 
conclusion that the courts or Defense Department would, as a re- 
sult, construe ASPR as being beyond the scope of subsection (a)(1). ^^^ 

114. Grossbaum specifically notes as part of the justification for deeming ASPR to 
be beyond the scope of section 553(a)(1): 


Of course, the relevant decision makers might conclude that 
ASPR is neither entirely inside nor entirely outside the scope of 
section 553(a)(1). Alternative positions are possible. One view might 
be that such procurement regulations are exempt only when they 
are applied to the acquisition of materiel specially designed for the 
peculiar requirements of the armed forces in the performance of 
their "military functions." The theory here is that only the acqui- 
sition of such materiel "clearly and directly" involves a "military 
function" as such, and that section 553(a)(1) operates by its terms 
only "to the extent that" a function of this sort is involved. This 
approach would suggest that public participation could be avoided 
by issuing two sets of Armed Forces Procurement Regulations — one 
set, promulgated without public participation, for the acquisition of 
materiel specially designed for the peculiar requirements of the armed 
forces in their performance of "military functions," and one set, 
formulated with public participation, for the acquisition of all 
other materiel needed by the armed forces. The difficulty with this 
approach is that an ordinary antibiotic pill may be as involved in 
and necessary to the performance of "military functions" as a 
specially designed item of military hardware. 

Another view might be that only those provisions of ASPR — if 
there are any — that are specially designed to handle the peculiar 
problems that arise in the acquisition of materiel for use in "mili- 
tary functions," as distinct from those provisions designed to handle 
problems that arise in the acquisition of materiel for the govern- 
ment in general, would be deemed to involve "clearly and directly" 
such a "military function." The theory would be that only the 
issuance of those particular sections of ASPR involve an activity 
specially fitted for, appropriate to, or expected of the armed forces 
as such due to their special qualifications, expertise, and nature. The 
problem with this view, however, is its underlying assumption that 
if a "military function" is performed by means similar to, or indis- 
tinguishable from, those used to execute a nonmilitary function, 
rules involving that function are not exempt under section 553(a)(1). 
Neither the language nor legislative history of the provision exempt- 
ing rules involving a "military function" from usual rule-making 
procedures justifies this conclusion. 

Furthermore, to exclude ASPR from the requirements of section 4 would be 
tantamount to locking the barn after the horse had been stolen, since the prepon- 
derance of government contract rules are first made by the ASPR Committee and 
subsequently aped by civilian agencies. Imposing the notice and comment require- 
ments of section 4 only with respect to proposed civil agency contract rules, rules 
that have already become fails accomplis by incorporation in ASPR, offers neither 
timely nor adequate protection to the public interest. 
Id. at 260-61. 


Realistically, of course, most of the previous discussion as to 
the scope of the "military function" exemption in general, or its ap- 
plication to ASPR in particular, is highly speculative. Comfortable 
or clear solutions with a likelihood of wide acceptance do not 
abound. Furthermore, a meaningful test of these arguments about 
ASPR, for example, will come only after the "contracts" exemption 
of section 553(a)(2) is repealed, since no one questions the exclusion 
of ASPR from normal rule-making procedures under that more 
specific and clear exemption. The exact scope of the "military func- 
tion" exemption thus remains unclear. Some things, however, are 
worth noting about it by way of summary. 

Not all rule-making undertaken by the Department of Defense 
involves a "military function." Nor is Defense the only department 
that engages in "military function" rule-making. Although it is not 
certain, the term "military function" probably means "armed forces 
function" rather than "war function" or "defense function." Sec- 
tion 553(a)(1) does not exclude all rules involving the armed forces; 
it is only rule-making involving "military functions" that is ex- 
cluded. Consequently, only rule-making involving an activity that 
is specially fitted for, appropriate to, or expected of the armed 
forces as such because of their peculiar nature, qualifications, or 
attributes is exempted. Furthermore, to be excluded under sub- 
section (a)(1) the rule-making in question must "clearly and di- 
rectly" involve such an activity. But what is "clear and direct" is not 
adequately defined. 

It is apparent that the term "military function" is unduly vague, 
hard to define, and harder yet to apply — especially in marginal 
cases. This alone presents significant problems. It is, for instance, 
not clear to what extent, if at all, rule-making involving procure- 
ment for the armed forces is exempt from section 553 by the 
"military function" exclusion. The term "military function" is viewed 
by those who must apply it as being very broad in scope. The 
imputed scope is also likely to increase rather than decrease. The 
Department of Defense, for example, is likely to rely on the "military 
function" exemption as a substitute for the section 553(a)(2) ex- 
clusions for rule-making relating to "public property, loans, grants, 
benefits, or contracts," if they are repealed. The reason for this is 
that it desires to continue the exclusion from section 553 of a whole 
range of rule-making now clearly exempt under section 553(a)(2), 
and arguably also exempt under section 553(a)(1). 

One last point concerning the scope of the "military function" 
exemption should be noted. As a matter of predictable predilection 
and practical reality, rule-making claimed by the Department of 


Defense to be exempt from section 553 because it involves a "military 
function" may more easily be treated as such by various other 
governmental authorities — including the courts — than similar claims 
by other agencies. After all, the Department of Defense is the specific 
agency whose reason for being is "to provide for the future [military] 
security of the country."^^^ Furthermore, the judgment of the De- 
partment of Defense on this issue, or for that matter the judgment 
of any agency on this issue, may also be presumed correct as a matter 
of law. Of course, it was argued earlier that, for a number of reasons, 
the burden of proof should probably rest on the agency to prove 
that rule-making sought to be exempted under this provision "clearly 
and directly" involves a "military function." But the law on this 
subject is unsettled, and the presumption of administrative regularity 
deeply ingrained. All of this magnifies the practical significance of 
the "military function" exemption of section 553(a)(1). 

C. "Foreign Affairs Function" 

Rule-making is also exempted by subsection (a)(1) from the 
requirements of section 553 "to the extent that there is involved a 
. . . foreign affairs function of the United States." Webster's defines 
"foreign affairs" as "matters relating to foreign countries: affairs 
other than domestic; esp: matters having to do with international 
relations and with the interests of the home country in foreign 
countries."^^^ A "function," it should be recalled, is an activity 
"specially fitted for," "appropriate to" or "expected of" something 
because of its peculiar nature, attributes, or qualifications. A "foreign 
affairs function," then, may be an activity specially fitted for, appro- 
priate to, or expected of international relations — the interests of this 
country in foreign countries — due to the peculiar nature or attributes 
of such relations. And all rule-making "clearly and directly" in- 
volving such an activity is exempt from section 553. 

There is a conflict of evidence as to whether the term "foreign 
affairs" was intended to be limited to strictly diplomatic functions — 
that is, activities "belonging to or proper to the personnel responsible 
for the conduct of international relations. "^^"^ On the one hand, a 
Congressman stated that the "exempted foreign affairs are those 
diplomatic functions of high importance which do not lend them- 
selves to public procedures and with which the general public is 

115. United States Government Organization Manual 1968-69, at 130-31. 

116. Webster's, supra note 55, at 889. 

117. Id. at 638. 


ordinarily not generally concerned/'^^^ More persuasive, however, is 
the argument that "the exemption is not limited to strictly diplo- 
matic functions, because the phrase 'diplomatic function' was em- 
ployed in [an earlier draft of the APA] and was discarded in favor 
of the broader and more generic phrase 'foreign affairs function.' "^^^ 
Both the Senate and House reports on the APA may limit the 
term somewhat, because they took the position that 

[t]he phrase "foreign affairs functions," used here and in some other 
provisions of the bill, is not to be loosely interpreted to mean any 
function extending beyond the borders of the United States but 
only those "affairs" which so affect relations with other governments 
that, for example, public rule-making provisions would clearly pro- 
voke definitely undesirable international consequences.^^o 

However, in light of the more general and unqualified statutory 
language stating the exemption for rule-making involving a "foreign 
affairs function," it is unclear whether the legislative history just 
referred to constitutes an effective or meaningful restriction of the 
term.^21 This question will be discussed at greater length later in 
the present section. 

Another bit of legislative history is worthy of note. In a comment 
on an earlier draft of the APA the following appears: 

It has been suggested that "foreign-affairs functions" should be 
defined and added to section 2 in order to exclude from the opera- 
tion of [the entire APA] all passport and visa functions as well as all 
duties of consular and diplomatic officers abroad. However, so far 
as these are not foreign affairs functions "requiring secrecy in the 
public interest," there would seem to be no reason why they should 
not be subject to the simple public information requirements of 
section 3.^22 

Although not completely clear, this seems to suggest that "foreign 
affairs function" was intended to encompass at least "all passport and 
visa functions as well as all duties of consular and diplomatic officers 
abroad." Rule-making "clearly and directly" involving those subjects 
is, therefore, exempt under section 553(a)(1) from usual rule-making 

118. Legislative History, supra note 13, at 358 (remarks of Representative Walter). 

119. Attorney General's Manual, supra note 13, at 27. The earlier bill can be 
found in Legislative History, supra note 13, at 157. 

120. Legislative History, supra note 13, at 199, 257. 

121. It is probable, in any event, that it would constitute no greater limitation of 
the exemption than the subsequent specific exclusion found in 5 U.S.C. § 553(b)(B) 
(1970) for rule-making in which the required notice and opportunity for public par- 
ticipation are found to be "impracticable, unnecessary, or contrary to the public 

122. Legislative History, supra note 13, at 12. 


procedures. How much further the exemption goes is another issue. 
It is not easy to determine what rule-making involves activities 
specially fitted for, appropriate to, or expected of international 
relations as such due to their peculiar nature or attributes. 

No clearer definition of the exact scope of the section 553 "foreign 
affairs function" exemption is supplied by the fact that when Con- 
gress amended the freedom-of-information provision of the APA in 
1967, it expressly excluded from that section matters that are "spe- 
cifically required by Executive order to be kept secret in the interest 
of . . . foreign policy."^^^ There is no evidence that the term "foreign 
policy" in section 552 was in fact considered in juxtaposition to the 
term "foreign affairs function" in sections 553 and 554. 

However, even if Congress had expressly considered the term 
"foreign policy" in comparison to the term "foreign affairs function," 
and purposefully chose the former over the latter for use in the 
freedom-of-information section, the message conveyed would be less 
than clear. "Foreign policy" has been defined as "the underlying 
basic direction of the activity and relationship of a sovereign state 
in its interaction with other sovereign states typically manifested in 
peace, war, neutrality, and alliances or various combinations or ap- 
proaches to these."^^^ It might be argued that an exemption for a 
"foreign policy function" would be narrower than an exemption for 
a "foreign affairs function" because the former concerns only activi- 
ties specially fitted for, appropriate to, or expected of the making or 
formulation of such policy, while the latter includes that and also all 
activities involving the execution of such policy. But it is very un- 
likely that Congress intended to permit exemptions from the free- 
dom-of-information provision only for matters involving the formu- 
lation of foreign policy, as opposed to its execution. In any event. 
Congress did intend to exclude from usual rule-making procedures 
all rule-making "clearly and directly" involved in "foreign affairs 
functions"; and that term certainly includes both the making and 
execution of "foreign policy." 

The "foreign affairs function" exemption may be coextensive 
with our nation's foreign affairs capacity. Since rule-making is ex- 
empted from section 553 only "to the extent that" it "clearly and 
directly" involves such a function, however, this exemption may 
apply only to agency rule-making under authority granted it spe- 
cially for foreign affairs purposes. If that is the case, an agency would 

123. Pub. L. No. 90-23. § 1, 81 Stat. 54 (codified at 5 U.S.C. § 552(b)(1) (1970)) (em- 
phasis added). 

124. Webster's, supra note 55, at 889. 


not be entitled to an exemption under subsection (a)(1) for rule- 
making undertaken pursuant to some general nonforeign affairs au- 
thority, even though it in fact acted with such foreign affairs con- 
siderations in mind. This line, however, may be difficult to draw, 
and also unjustifiable in light of the purpose and general language 
of the particular exemption in question. 

In any case, it is clear that the "foreign affairs" exception is ap- 
plicable to many functions of the State Department.^25 j^ 1957^ the 
State Department estimated that about forty per cent of its rules in- 
volved foreign affairs functions and were, therefore, exempt for that 
reason from section 553.^26 Certainly, if strategic foreign policy for- 
mulation is deemed to constitute rule-making within the meaning 
of the APA, it is exempt as a "foreign affairs function." Nothing is 
more clearly adapted to, especially fitted for, or appropriate to the 
conduct of our international relations by virtue of its peculiar 
nature than strategic foreign policy planning. Consequently, formu- 
lation of all the specific details of our foreign policy toward France 
when she left NATO would be an exempt "foreign affairs function." 
So, too, after the coup in Greece, the determination as to whether 
we should communicate with the new government, what our atti- 
tude toward the seizure should be, and whether any action should 
be taken to protect Americans in Greece, would also be exempt as a 
"foreign affairs function."^^? Similarly, it has been implied that 
"rules pertaining to . . . methods of subsidizing the military opera- 
tions of friendly powers" are exempt as a "foreign affairs function."^28 
Presumably, all rule-making directly involving a foreign aid program 
would also be exempt from usual procedures under subsection 

Many other kinds of rules made by the State Department, how- 
ever, are allegedly claimed to be exempted by the "foreign affairs 
function" provision of section 553(a)(1). For example, the Depart- 
ment considers all rules made by the Educational Exchange Service, 
which "is empowered to promote, facilitate, and conduct programs 
for the exchange of persons between the United States and foreign 
countries," exempt from section 553 by subsection (a)(1) because 

125. Attorney General's Manual, supra note 13, at 27. 

126. 1957 House Survey, supra note 39, pt. 9 (Department of State), at 927. 

127. Hearings on S. 518 Before the Subcomm. on Administrative Practice and Pro- 
cedure of the Senate Comm. on the Judiciary, 90th Cong., 1st Sess. 321-22 (1967) [here- 
inafter S. 518 Hearings]. 

128. S. 1663 Hearings, supra note 104, at 679. 

129. Wallace, The President's Exclusive Foreign Affairs Power over Foreign Aid, 
1970 Duke L.J. 453, 454-94. 


they "involve foreign affairs functions of the United States."^^** The 
same has been said of all rules involving the relief, protection, and 
regulation of American seamen and ships abroad.^^^ The Depart- 
ment of State also claims that "[a]ll rules made by the Passport 
Office relate to foreign ajffairs functions of the United States" and 
are, therefore, exempt under section 553(a)(l).^^2 The reason offered 
by the Department for this view is that "a passport is a formal letter 
issued by the Secretary of State to officials of foreign governments 
attesting to the identity and citizenship of the bearer and requesting 
that certain courtesies and privileges be extended to him."^^^ In ad- 

[t]he Visa Office takes the position that all of its regulations involve 
a foreign-affairs function of the United States and, hence, their pub- 
lication is considered to be within the exemption from notice of 
proposed rule-making as provided in section 4 of the Administrative 
Procedure Act. 1^4 

Under the Immigration and Nationality Act,"^ that office makes 
rules dealing with all aspects of immigration into this country and 
the determination of nationality of a person not in the United 

The Department has even stated that rule-making involving 
"[sjtudies contracted for at the request of the Historical Division," 
which "prepares the foreign relations volumes which date from 1861 
and constitute the only official record of United States diplomacy," 
is entitled to an exemption under the "foreign affairs function" 
provision because those studies "may indirectly affect the formula- 
tion of foreign policy on that particular subject.""' And rule-making 
by the Authentications Section, which establishes a schedule of fees 
based on cost of service, is also claimed to be exempt under section 

130. 1957 House Survey, supra note 39, pt. 9 (Department of State), at 928. See also 
id. at 931: "There is no statutory provision relating to any rulemaking function of the 
Educational Exchange Service requiring notice, hearing, or record of the hearing" be- 
cause the "Administrative Procedure Act (foreign affairs exemption) does not require 
notice or public rulemaking proceedings concerning" such rules. 

131. Id. at 924-44. 

132. Id. at 946. Consequently, such things as the "determination of geographical 
limitations of general applicability on issuance of passports" are excluded under section 
553(a)(1). S. 1663 Hearings, supra note 104, at 387. 

133. 1957 House Survey, supra note 39, pt. 9 (Department of State), at 946. 

134. Id. at 952. The Department does claim, however, that it follows usual pro- 
cedures in cases of "routine visa procedures." S. 1663 Hearings, supra note 104, at 387. 

135. 8 U.S.C. §§ 1101-503 (1970). 

136. 1957 House Survey, supra note 39, pt. 9 (Department of State), at 950-52. 

137. Id. at 931, 933, 


553(a)(1) on the grounds that "[a]ll authenticated documents have 
a foreign affairs interest."^^^ Note also that "[o]f the approximately 
14 pages of rules relating to the tariff of fees" which Foreign Service 
officers are supposed "to collect for [their] official services," the De- 
partment stated that "[ajpproximately 10 per cent relate to foreign 
affairs functions. "^^^ 

Of course, the "foreign affairs function" exemption is also ap- 
plicable to agencies other than the State Department when they 
engage in rule-making involving such functions.^^" Many federal 
agencies other than the Department of State claim to make rules of 
this sort. For example, the Post Office Department asserted that its 
regulations involving the international postal service were exempt 
"foreign affairs functions.""^ And the Atomic Energy Commission 
maintained that its "rulemaking relating to Export of Byproduct 
Material . . . insofar as the establishment of export restrictions for 
certain countries [is involved], e.g. Southern Rhodesia . . . [is] ex- 
empt under § 553(a)(1) as involving a 'foreign affairs function.' ""^ 
Similarly, the Federal Power Commission has noted that 

the Commission's power to authorize the export of electricity . . . the 
export and import of natural gas . . . and to issue Presidential per- 
mits authorizing the construction, operation or maintenance of 
electric power and natural gas facilities on the borders of the United 
States . . . would appear to be encompassed within the exemption 
of [section] 553(a)(1) relating to foreign affairs.^^^ 

The Department of Agriculture has also suggested that its rule- 
making under the Food for Peace Program,^** which is designed to 
develop and expand markets for United States agricultural com- 
modities and combat hunger, is exempt from section 553 because it 
involves a "foreign affairs function, "^*^ So, too, that department has 

138. Id. at 936. 

139. Id. at 940-41. 

140. Attorney General's Manual, supra note 13, at 27. See also note 44 supra and 
accompanying text. 

141. Delaney, The Federal Administrative Procedure Act and the Post Office Depart- 
ment, in G. Warren, supra note 47, at 196, 202; 1969 Survey Response: "Rule-making 
by the Post Office Department in implementation of various international postal con- 
ventions as authorized by [39 U.S.C. §§ 505-06 (1970)] . . . [is] exempted ... by 
[section] 553(a)(1)." See also 1957 House Survey, supra note 39, pt. 8 (Post Office De- 
partment), at 874: "All our regulations concerning our international mail fall within 
. . . [section 553(a)(1)]." 

142. 1969 Survey Response. The regulations may be found at 10 C.F.R. §§ 36.1-.50 

143. 1969 Survey Response. 

144. See 7 U.S.C. § 1702 (1970). 

145. 1969 Survey Response, 


noted that its "regulations relating to exports and imports under the 
plant and animal quarantine acts, meat and poultry products inspec- 
tion acts, and other regulatory laws" may be exempt under section 
553(a)(1) because they "affect foreign relations."^*^ 

The Department of the Treasury's Office of Foreign Assets Con- 
trol is responsible for the Foreign Funds Control Regulations,^^"^ the 
Foreign Assets Control Regulation,^^^ the Transaction Control Regu- 
lations,^^" the Cuban Assets Control Regulations,^^** and the Rho- 
desian Sanctions Regulations.^"^^ It reported: 

The kinds of rules [developed in these programs] which are exempt 
from the rulemaking procedures under section 553(a)(1) as involving 
a "foreign affairs function" are . . . [gjeneral blocking rules ....[,] 
[gjeneral licenses and authorizations unblocking classes of property 
or persons or authorizing classes or transactions ...[.] and [rjules 
related to the blocking orders requiring reports and records of 
blocked property and of prohibited transactions.^^^ 

The Department of the Treasury explained: 

All of the above described kinds of rules issued by the Office of 
Foreign Assets Control clearly involve "a foreign affairs function of 
the United States." There can be no question that the blocking 
actions taken under the authority of Section 5(b) of the Trading 
with the Enemy Act and Section 620(a) of the Foreign Assistance 
Act, were taken exclusively because of urgent foreign policy con- 
siderations of the United States Government and that they clearly 
have a direct bearing on our relations with foreign countries. To an 
equal degree, the actions in the form of general licenses taken simul- 
taneously with the blocking orders or subsequent thereto to exempt 
from or license out certain classes of transactions or persons from 
their prohibitions as well as the related reporting requirements are 
actions involving the foreign affairs functions of the United States. 
It is equally evident that the actions taken by the Treasury De- 
partment to prohibit financial and commercial dealings with South- 
ern Rhodesia, and the corollary rules exempting or licensing classes 
of prohibited transactions deemed desirable in order to maintain a 
flexible system, involve a foreign affairs function since they form an 

146. 1969 Survey Response. 

147. 31 C.F.R. §§ 520.01-.809 (1972). 

148. 31 C.F.R. §§ 500.101-.809 (1972). 

149. 31 C.F.R. §§ 505.01 -.60 (1972). 

150. 31 CJF.R. §§ 515.101-.809 (1972). 

151. 31 C.F.R. §§ 530.101-.809 (1972). 

152. 1969 Survey Response. See also 1957 House Survey, supra note 39, pt. 10 (De- 
partment of the Treasury), at 1017. 


important part of the United States Government's implementation 
of resolutions of the United Nations.i'^^ 

The Department of the Treasury has also claimed exemption under 
the "foreign affairs function" provision for all its rules involving 
"Delivery of Checks and Warrants to Addresses Outside the United 
States, Its Territories and Possessions. "^"^^ Similarly, regulations deal- 
ing with "International Traffic in Arms" previously issued by the 
Secretary of State^^^ and now issued by the Secretary of the Treasury 
in "the administration of the firearms import control program pur- 
suant to . . . the Mutual Security Act of 1954," are deemed in "the 
exempt category relating to foreign affairs."^*** 

The Department of Commerce has noted that rule-making in- 
volving a number of its programs is exempted from the requirements 
of section 553 by the "foreign affairs function" language. More spe- 
cifically, all rule-making involving the following is said to be ex- 
empt: ^^^ "The Textile Quota Program," which limits exports of tex- 
tiles from foreign countries to the United States i^*^^ the "Implementa- 
tion of United Nations Resolution Regarding Trade with Southern 
Rhodesia" ;^^® "Required Reports on Foreign Investments and on 
International Receipts and Payments and Fees";^^° and "Determina- 
tion of Bona Fide Motor-Vehicle Manufacturers Under the Auto- 
motive Products Trade Act."^*^ In response to a 1957 survey the 
Department also suggested that its rule-making "in connection with 
vessel operations in foreign commerce includ[ing] such matters as 
description of foreign-trade routes . . . [and] approval of United 
States Vessels to foreign flag" was an exempt "foreign affairs func- 
tion."^^2 At j-j^g same time, it asserted that rule-making pursuant 

153. 1969 Survey Response. On blocking actions, see 22 U.S.C. § 2370(a) (1970); 50 
U.S.C. App. § 5(b) (1970). 

154. 1969 Survey Response. See 31 C.F.R. §§ 211.1-.6 (1972). 
- 155. Exec. Order No. 10,973, 3 C.F.R. 493 (Comp. 1965). 

156. 1969 Survey Response. See 22 U.S.C. § 1934 (1970). 

157. 1969 Survey Response. 

158. See 7 U.S.C. § 1854 (1970); Exec. Order No. 11,052, 3 C.F.R. 253 (Comp. 1962), 
as amended, Exec. Order No. 11,214, 3 C.F.R. 122 (Comp. 1965). A similar claim was 
asserted by the Department of Labor, S. 518 Hearings, supra note 127, at 241, when 
that program was under its jurisdiction. See text accompanying note 208 infra. 

159. See 22 U.S.C. § 287c (1970); Exec. Order No. 11,322, 3 C.F.R. 635 (Comp. 1968), 
as amended, Exec. Order No. 11,419, 3 C.F.R. 442 (Comp. 1968). 

160. See 22 U.S.C. §§ 286-86/ (1970); Exec. Order No. 10.033, 3 C.F.R. 70 (Comp. 
1949), 22 U.S.C. following § 286f (1970). 

161. See 19 U.S.C. §§ 2001-33 (1970); 30 Fed. Reg. 13683 (1965). 

162. 1957 House Survey, supra note 39, pt. 2 (Department of Commerce), at 126. 


to the Export Control Act of 1949,"^ which empowered the Presi- 
dent to prohibit or curtail exportation from this country of any arti- 
cles, materials, supplies, or technical data "except under such rules 
and regulations as he shall prescribe,"^^* involved "foreign affairs 
functions" exempted by section 553(a)(1) from usual procedures, or 
at least, that "[ajpproximately 80 to 90 percent of [those] rules in- 
volve[d] either military or foreign affairs functions."^^^ In addition, 
the Department of Commerce has stated: 

It could be argued that rule-making by the Office of Foreign Direct 
Investments is exempt from the requirements of [section] 553(b)-(e), 
since the OFDI program is based on the President's authority under 
section 5(b) of the Trading with the Enemy Act, a "foreign affairs" 
function. ^^^ 

Some agencies take a narrower view of the scope of the "foreign af- 
fairs function" exemption. For example, the Legislation and Regula- 
tions Divisions of the Department of the Treasury jointly issue "rules 
under the provisions of the Internal Revenue Code which affect 
international transactions, including the interest equalization tax 
provisions, as well as provisions under the Income and Estate Tax 
Treaties to which the United States is a party."^®'^ These divisions 
have recently stated with respect to the issuance of such regulations: 

We do not believe this exception [section 553(a)(1)] applies to any 
regulations issued jointly by our offices because none of these regula- 
tions affect "only those 'affairs' which so affect relations with other 
governments that, for example, public rulemaking provisions would 
clearly provoke definitely undesirable international consequences."^*'^ 

A recent analysis of the "foreign affairs function" exemption found 
in section 554 of the APA, which governs adjudication, employed a 
similar approach to construction of that provision. It concluded that 
Congress intended the adjudication provision to apply "except 'to 
the extent that' a particular proceeding would interfere with the 
conduct of foreign affairs functions and, as two congressional com- 
mittees said, 'clearly provoke definitely undesirable international 

163. Ch. 11, 63 Stat. 7. 

164. Ch. 11, § 3(a), 63 Stat. 7. 

165. 1957 House Survey, supra note 39, pt. 2 (Department of Commerce), at 138, 

166. 1969 Survey Response. See 50 U.S.C. App. § 5(b) (1970). In any event, OFDI 
follows usual procedures when it makes rules. See note 40 supra. 

167. 1969 Survey Response. 

168. 1969 Survey Response, quoting Attorney General's Manual, supra note 13, 
at 25-26. See text accompanying note 120 supra. 


consequences.' "^^^ These narrow readings of the "foreign affairs 
function" exemptions in the rule-making and adjudication provi- 
sions are bolstered by the bit of legislative history quoted to support 

When applied to the adjudication provision, however, the narrow 
reading of "foreign affairs function" proffered above may also be 
justified on a more compelling ground than the legislative history of 
the APA. Denial of an adjudicatory hearing, even on the basis of an 
asserted governmental interest in the unrestrained conduct of foreign 
affairs, may in some instances raise serious constitutional due process 
problems. For example, the argument that enforcement hearings of 
the Office of Foreign Direct Investment "may not have to comply 
with the otherwise applicable constitutional requirement of a trial- 
type hearing [of the kind imposed by the adjudication provision] 
because OFDI exercises the plenary power of the President and Con- 
gress over foreign affairs [in such cases] seems doubtful.""^ If, how- 
ever, the "foreign affairs function" exemption in the adjudication 
provision is read to exclude only those particular compliance pro- 
ceedings that would interfere with our nation's conduct of "for- 
eign affairs functions" because they would "clearly provoke definitely 
undesirable international consequences," constitutional objections 
would probably be satisfied "[bjecause Congress has supplied a re- 
sponsible resolution of the competing interests involved."^'^^ Further 
support for this restrictive reading of the adjudication provision's 
"foreign affairs function" exemption might be gleaned from the 
action of the United States Supreme Court when it subjected depor- 
tation proceedings to the APA's adjudication provision despite its 
"foreign affairs function" exemption."^ But the Court did not dis- 
cuss the scope of this exemptive language and the holding was seem- 
ingly dictated by constitutional concems.^^^ These concerns would 
not be present with regard to any effort to define the scope of this 
exemption in the rule-making provision. The Constitution does not 

169. Freedman, supra note 49, at 27, quoting Legislative History, supra note 13, 
at 199, 257. 

170. Freedman, supra note 49, at 26. 

171. Id. at 27. 

172. Wong Yang Sung v. McGrath, 339 U.S. 33 (1950). 

173. The Court appeared worried that if such a proceeding were excluded from the 
statutory requirements of a trial-type hearing imposed by the adjudication provision, 
a serious question of due process would be presented. 339 U.S. at 49-51. This conflict 
between the interpretation of the term "foreign affairs function" in the rule-making 
provision and the interpretation of the term in the adjudication provision is noted in 
Parker, Federal Administrative Regulations: A General Survey, 6 Miami LQ. 324 
347-48 n.l72 (1952). 


require any public participation in administrative rule-making of 
the sort prescribed by section 553(b)-(e).^^^ As a consequence, the 
most important consideration supporting such a restrictive reading 
of the term "foreign affairs function" in the adjudication provision 
is absent with respect to a reading of that term in the rule-making 

But there are, after all, other very good reasons for a similar 
reading of the term in the two provisions. The language of the two 
provisions is the same; the legislative history of both provisions on 
this question is also the same and would justify this result; and the 
House Report on the APA specifically noted that "the term 'foreign 
affairs' is used in [the adjudication provision, section 5] in the same 
sense as section 4 [the rule-making provision]. "^^^ Furthermore, as 
noted earlier, the section 553(a)(1) exemptions should be read nar- 
rowly anyway. If, therefore, the "foreign affairs function" exemption 
must, in order to satisfy possible constitutional objections, be read to 
exclude from the adjudication provision only cases in which com- 
pliance with its requirements would interfere with the conduct of 
foreign affairs by clearly provoking undesirable international conse- 
quences, it should be read the same way in the rule-making provi- 
sion. A number of possible difficulties with this conclusion exist, 

As previous discussion has demonstrated, this "undesirable con- 
sequences" construction of section 553(a)(1) has certainly not been 
accepted by most of the agencies claiming to issue rules in the for- 
eign affairs area. And it is also at odds with the exemptive provision's 
much more general language — all rule-making is excluded from sec- 
tion 553 "to the extent that there is involved ... a foreign affairs 
function." No qualifying language of any sort appears in the exemp- 
tion. This construction is also inconsistent with the very slight and 
perhaps unreliable judicial authority on the subject. One court 
maintained by way of a very general dictum that "immigration, deal- 
ing with the admission and expulsion of aliens, is an exercise of a 
sovereign power in international relations" and, therefore, all rule- 
making on that subject is excluded from section 553 by the "foreign 

174. 1 K. Davis, supra note 5, §§ 6.05, 7.06, 7.08. See also R. Lorch, Democratic 
Process and Administrative Law 96 (1969): "Common law does not require a lawmaker 
(by that is meant a statute maker or an ordinance maker or a rulemaker) to listen. Nor 
does the U.S. Constitution. However, the U.S. Administrative Procedure Act does re- 
quire agencies in most situations" to follow the procedures specified therein requiring 
agencies to listen before they make rules. 

175. Legislative History, supra note 13, at 261. 


affairs function" exemption."^ However, the significance of this ju- 
dicial language may be small in light of the Justice Department's 
contrary position on the issue.^'^^ 

Exemption from section 553 of only that particular rule-making 
which involves "foreign affairs functions," and whose compliance 
with usual procedures would harm the conduct of our international 
relations by producing undesirable international consequences, may 
also be objected to on another basis. Sections 553(b)(B) and (d)(3) 
exclude rule-making covered by section 553 from usual procedures 
when those procedures would be "impracticable, unnecessary, or con- 
trary to the public interest." There can be no doubt that any rule- 
making which involves "foreign affairs functions," and whose com- 
pliance with usual requirements would interfere with these func- 
tions by producing undesirable international consequences, would 
be exempted by these provisions. Consequently, it may be argued 
that such a narrow reading of the "foreign affairs function" exemp- 
tion would make that provision redundant and unnecessary because 
it would then be virtually congruent with the more specific exclu- 
sions of sections 553(b) (B) and (d)(3). Congress, therefore, must have 
intended the section 553(a)(1) exclusions to be broader than 
these more narrowly tailored provisions. Certainly this view is sup- 
ported by the fact that, under the language of section 553(a)(1), rule- 
making need only involve a "foreign affairs function" to be exempt. 

This argument against the "undesirable consequences" construc- 
tion of the section 553(a)(1) exemption is not convincing. Even if the 
subsection (a)(1) exemption were read as suggested by this construc- 
tion it would not be redundant because it would be broader than the 
more specific "good cause" exemptions of sections 553(b)(B) and 
(d)(3). Unlike the latter two, the former exemption would apply to 
the right to petition granted by section 553(e) and would not re- 
quire any statement of reasons in each case to justify its use. Further- 
more, the "undesirable consequences" construction of the "foreign 
affairs function" exemption of section 553(a)(1) has other virtues: 
uniformity with the similar adjudication provision exemption — a re- 
sult specifically intended by Congress — and also consistency with the 
specific legislative history of the APA on this subject. It is worth re- 

176. Yiakoumis v. HaU. 83 F. Supp. 469, 472 (E.D. Va. 1949). United States 
ex rel. Knauff v. Shaughnessy, 338 U.S. 537 (1950), also referred in a general way to 
the exclusion of dangerous aliens as a foreign afiFair. 

177. 1957 House Survey, supra note 39, pt. 6 (Department of Justice), at 650 (Im- 
migration and Naturalization Service reported that none of its rules "involved" "foreign 
affairs" within the meaning of section 553(a)(1).). 


iterating that Congress did not intend this phrase "to be loosely in- 
terpreted to mean any function extending beyond the borders of the 
United States but only those 'affairs' which so affect relations with 
other governments that for example, public rule making provisions 
would clearly provoke definitely undesirable international conse- 

Nevertheless, this construction of the exemption has not been ac- 
cepted in practice or theory by most federal agencies making rules 
arguably within its ambit; nor has it been accepted by any court. It 
is, in addition, inconsistent with the broad language employed in 
section 553(a)(1). To complicate matters further, it should also be 
noted that "when the total situations dealt with by the State Depart- 
ment [for example] are analyzed in terms of their constituent facts, 
the distinction between 'foreign' and 'domestic' affairs frequently 
turns out to be quite illusory."^^^ The particular provision in ques- 
tion here is, therefore, vague in application under the "undesirable 
consequences" construction or, for that matter, under any broader 
construction. When these points are added to the fact that the burden 
of proof is likely to be on the person who challenges an agency's 
claim to exception under the "foreign affairs function" provision of 
section 553(a)(1), the significance of this exclusion may be fully ap- 
preciated. And just as the courts may be particularly solicitous of 
claims made by the Department of Defense for exemption under the 
"military function" language, they may be equally solicitous of 
claims made by the State Department for exemption under the 
"foreign affairs function" language. 

IV. Is Section 553(a)(1) Necessary? 

Federal agencies that make most of the rules involving "military 
or foreign affairs functions" take the position that this exemption 
is both justified and desirable. It is their view that repeal of section 
553(a)(1) would somehow detrimentally interfere with the perfor- 
mance of their responsibilities in connection with such rule-making. 
The specific reasons advanced to justify the exemption of rule- 
making involving "military and foreign affairs functions" range in 
character from the purely theoretical to the intensely practical. In 
the following discussion an attempt will be made to enumerate and 

178. Legislative History, supra note 13, at 199, 257. 

179. Timberg, Wanted: Administrative Safeguards for the Protection of the Indi- 
vidual in International Economic Regulation, 17 Ad. L. Rev. 159, 164 (1965), citing 
Briehl V. Dulles, 248 F.2d 561, 591 (D.C. Cir. 1957) (Bazelon, J., dissenting), quoting 
Department of State, Our Foreign Policy 4 (General Foreign Policy Ser. No. 26, 1950): 
"There is no longer any real distinction between 'domestic' and 'foreign' affairs." 


evaluate all of the possible reasons for the incorporation of section 
553(a)(1) exclusions in the statute. Only then can it be ascertained 
whether this exemption is justified in light of the important com- 
peting policies that favor public participation in rule-making. 

One practical justification for the subsection (a)(1) exclusions 
may be that their elimination would expand agencies' work loads, 
increase the costs of carrying on these functions, and delay and 
thereby generally interfere with the government's performance of 
these particularly vital and sensitive functions. For example, with 
respect to one set of rules that may involve a "military function," the 
Department of Defense claimed: 

The necessity for notice, public hearing, and publication, as well as 
the opportunity for any interested person to petition for change or 
repeal of a rule, would have the effect of so hindering and delaying 
the supplementation and modification of these rules that [they] 
would become unresponsive to the changing needs of both the De- 
partment of Defense and [those affected by themj.^^" 

The Department of Defense has also noted that the purpose of some 
of the acts entrusting to it "military functions" "can be effectively 
implemented by rules promulgated without the expense and ad- 
ministrative effort involved in participation by [the] general pub- 
lic."^^^ A comment made by the Department of the Treasury also 
seemed to suggest that subjecting rules involving the subsection 
(a)(1) functions to section 553 "would be unduly burdensome upon 
the agencies. "^^2 It has also been stated as a general proposition that 
adherence to the requirements of section 553 for some rule-making 
involving "military functions" may "interfere unduly with the oper- 
ation and administration of the Office of the Secretary of Defense 
and the military department" and, therefore, the "military function" 
exemption is necessary.^^^ 

Elimination of the present subsection (a)(1) exemptions may also 
appear undesirable because it would cause adherence to the proce- 
dures of section 553(b)-(e) in many cases where the public has little 
interest in the rule-making or is unlikely to make a significant con- 

180. Letter from Neil E. Harlan, Assistant Secretary of the Air Force, to Senator 
James Eastland, Feb. 20, 1964, in S. 1663 Hearings, supra note 104, at 307. 

181. 1957 House Survey, supra note 39, pt. 3 (Department of Defense), at 292. 

182. Letter from Fred B. Smith, Acting General Counsel of the Treasury, to 
Senator James Eastland, Feb. 11, 1964, in S. 1663 Hearings, supra note 104, at 389. 

183. 1957 House Survey, supra note 39, pt. 3 (Department of Defense), at 347 (made 
in regard to rules relating to correction of military or naval records). See also id. at 
332-33 (in regard to rules involving the Discharge Review Boards); S. 1663 Hearings, 
supra note 104, at 389 (Department of Treasury). 


tribution to it. So, too, many rules involving one of these functions 
may be so limited in their application or, for that matter, have such 
a minimal public impact, that any solicitation of comment from the 
public would be fruitless. It has, therefore, been argued that the 
section 553(a)(1) exemptions are justified because many such rules 
are not controversial, or would elicit no response from the public. 
The Department of the Treasury has stated, for example, that "many 
rules which must, or normally would, be adopted prior to any public 
participation are not controversial."^^* And the Post Office has 
argued that these exemptions are justified with respect to those of 
its rules involving "military or foreign affairs functions" because 
"[ejxperience has shown that the bulk of the Departmental regula- 
tions relating to management of the mails are not of sufficient sub- 
stance or general interest to elicit responses when statutory rule- 
making procedures are followed."^^^ 

Additionally, it has been suggested that the section 553(a)(1) ex- 
clusions are justified because there is often no specially interested 
and identifiable public whose views should be solicited with regard 
to such rules, or because the affected members of the public have not 
yet been identified or are not yet identifiable. As a consequence, ad- 
herence to the requirements of section 553 in such cases is a waste. 
The Department of State sees this as a justification for the section 
533(a)(1) exclusion, noting that many rule-making decisions involv- 
ing such functions "are a matter of general concern to the American 
public, and no one individual has a greater interest than any 
other."^^^ (The dubious logic here seems to be that since everyone is 
interested, no one should have an opportunity to participate and 
thereby possibly influence the decision makers!) And the Depart- 
ment of Defense has stated in justification for continuance of the 
"military function exemption" that with respect to some rules im- 
plementing that function there is "no way of ascertaining, at the time 
rules are made, which members of the public will be affected by the 
rules" ;^^'' no one, therefore, is likely in such cases to utilize the op- 
portunity for participation that would be created by agency ad- 
herence to section 553 requirements. It has also been more generally 
alleged that requiring notice and public participation with respect 

184. S. 1663 Hearings, supra note 104, at 389. 

185. 1969 Survey Response. 

186. S. 518 Hearings, supra note 127, at 322. 

187. 1957 House Survey, supra note 39, pt. 3 (Department of Defense), at 292 
(justifying the administration of the resettlement program of reimbursement for mov- 
ing expenses to the owners and tenants of land acquired by the military departments). 


to rules involving a "military or foreign affairs function" would "not 
be particularly helpful or desirable."^^^ In this connection the De- 
partment of Defense has stated: 

[BJearing in mind the broad definition in section 2 of "rulemaking," 
would it be wise to subject to the requirements of notice, formal 
consultation, and hearing the issuance of regulations governing such 
widely diverse military functions as the operation of the Reserve 
officers' training program in civilian educational institutions, the 
determination and designation of vital industrial facilities in support 
of military mobilization production programs, the implementation 
of the Defense scientific and technical information program, or the 
choice between commercial or military transportation facilities for 
military supplies or personnel? Such regulations govern military func- 
tions which do not appear to fall within the exception for "any 
matter relating to internal management or personnel of an agency." 
Yet subjecting the promulgation of such regulations to the formal 
requirements of rulemaking is not likely to be of benefit to anyone 
either within or outside the Department of Defense.i^a 

Furthermore, if rule-making relating to "military and foreign 
affairs functions" is subjected to the requirements of section 553(b)- 
(e), in some cases the agencies involved in such rule-making and 
those members of the public most directly affected may be placed in 
adversary positions, thereby discouraging mutual cooperation to- 
ward finding the best solution to common problems. On that basis, 
it may be argued, the present exemption for rule-making involving 
these functions should be maintained. 

Repeal of subsection (a)(1) may also be objected to on another 
general ground. Forcing adherence to the mandates of section 553 
for any subsection (a)(1) rule-making would inevitably result in some 
loss of flexibility for such rule-making. The Post Office stated, as an 
example, that repeal of these exemptions "would be disadvantageous 
in that it would require the following of formalized procedures with 
attendant delays and loss of flexibility without corresponding bene- 
f^(. "190 ^ related argument is that elimination of these exemptions 
would discourage agencies from making worthwhile changes in rules 
involving these functions because of the more formal and particular- 
ized procedures that would be required. The Post Office also sug- 
gested that subjugation of these rules to section 553 "would result 

188. 1969 Survey Response (Commerce Department, OFDI). 

189. Letter from L. Niederlehner, Acting General Counsel of the Department of 
Defense, to Senator James Eastland, July 23, 1964, in 5. 1663 Hearings, supra note 104, 
at 492-94. 

190. 1969 Survey Response. 


primarily in the . . . discouragement of desirable changes and would 
result in an overformalization of mail management. "^^^ Other agen- 
cies promulgating such rules might well make a similar point. 

Section 553(a)(1) is also said to be justified on the ground that in 
its absence, there would be uncertainty in some cases about whether 
public rule-making procedures must be followed, and thus litigation 
or use of those procedures in inappropriate situations would result. 
The Department of Defense reported, for example, that the primary 
disadvantage to that agency of eliminating the broad exclusions in 
section 553 would be "uncertainty" because the extent to which 
its rule-making fits under the more limited exemptions found 
within section 553(b)-(e) was unclear. This "leads the Department 
of Defense to fear a rash of litigation testing . . . [its] interpretation 
of these [other exemptions]. "^^^ 

The current exemptions may also be considered necessary for 
another reason. In some cases, section 553 procedures may be an in- 
sufficient means by which to assure that the relevant people partici- 
pate adequately in rule-making relating to the exempted subjects. 
Requiring adherence to those procedures in the subsection (a)(1) 
situations, therefore, might sometimes force an agency to follow two 
sets of procedures in order to involve the proper people. In addition, 
it may be alleged that "military and foreign affairs function" exemp- 
tions are necessary because some rules involving these functions may 
require joint action by two authorities. In such cases, one may argue, 
the procedures of section 553 may be irrelevant, wasteful, and use- 
less. They would only induce communication by the public to an 
agency with respect to proposed rules that the agency does not have 
a completely free hand in shaping. (The dubious logic here seems to 
be that if two agencies have to agree on the rules the public should 
have an opportunity to influence neither!) The Post Office has seem- 
ingly accepted this view. It has noted that 

[t]his would be particularly true in the international area where 
Departmental regulations are developed by negotiation with foreign 
postal authorities and are not subject to unilateral variation by the 
Department. Similarly in the administration of the mail service for 
the Armed Forces regulations are developed by or in conjunction 
with the Department of Defense and are not subject to unilateral 

191. 1969 Survey Response. 

192. 1969 Survey Response. See also S. 1663 Hearings, supra note 104, at 307 ("Absent 
a decision by a court of competing \sic\ jurisdiction in each particular case, the validity 
of any rule could be subject to challenge . . . ."); Letter from Frederick G. Button, 
Assistant Secretary of State, to Senator James Eastland, Dec. 6, 1963. in id. at 385-87. 

193. 1969 Survey Response. 


There are significant difficulties witfi all of these general justifica- 
tions for the current section 553(a)(1) exclusions. In the first place, 
they do not distinguish rule-making relating to these particular ex- 
empted categories as a class from rule-making now subjected to the 
requirements of section 553(b)-(e). Every one of the arguments out- 
lined as justifications for excluding subsection (a)(1) rule-making 
from section 553's procedures could also be made with respect to 
those classes of rule-making already subject to the usual rule-making 
procedures. If these exclusionary justifications were found wanting 
with respect to that rule-making currently within the scope of section 
553, should they not be found similarly wanting with respect to the 
kinds of rule-making currently exempt from section 553? 

For example, the complaint that increased cost and work load, 
general delay, duplication, and the like will result if the currently 
excepted rule-making must follow the requirements of section 
553(b)-(e) could also be made with respect to the run-of-the-mill 
rule-making that we have already decided to subject to those pro- 
visions.^^^ The argument that adherence to usual rule-making proce- 
dures in these cases will, as a general proposition, reduce needed 
flexibility, cause uncertainty and litigation, be a waste in many cases, 
and discourage needed changes in rules, could also undoubtedly be 
used to support the exemption of all the currently included rule- 
making. Similarly, the assertion that subjugation of such rule-making 
to section 553 will, in many cases, be unfruitful, or of no real benefit 
to the agency or the public, could be made about much rule-making 
already included in section 553. If the policy of public participation 
is deemed sufficiently important to risk some of these possible conse- 
quences for the rule-making already subject to the APA rule-making 
provision, it is also worth risking them to bring rule-making involv- 
ing "military and foreign affairs functions" within those require- 

A second major defect with many of the arguments discussed 
above is that they do not apply to all such rule-making. That is, 
arguments seeking to justify an unqualified, across-the-board exemp- 
tion for all rule-making involving "military and foreign affairs func- 
tions" on the ground that it is unreasonable or unwise to require 
some or even a large part of such rule-making to be conducted in 
accordance with section 553, must necessarily be considered inade- 
quate. If public participation is as important as our society seems to 

194. The Administrative Conference has concluded that these burdens are insuf- 
ficient to exclude all rule-making relating to "public property, loans, grants, benefits, 
or contracts" from section 553. See Recommendation No. 16, supra note 8. 


think it is, exemption should only be granted for those particular 
cases in which the benefit is not worth the burden. Although the 
arguments discussed previously may suggest that the benefit is not 
worth the burden in some or even many cases of rule-making involv- 
ing these particular functions, they do not demonstrate that conclu- 
sion for all of such rule-making as a class. 

It has been claimed, however, that inclusion within the coverage 
of section 553 of all rule-making involving "military and foreign 
affairs functions" as a class would be more deleterious than the in- 
clusion of other classes of rule-making within that provision. The 
Department of State noted specifically that the general "need for 
speed and flexibility in making decisions . . . [has] necessarily led 
to different procedures [for foreign affairs function rule-making] 
than would otherwise prevail."^^^ The Department of Defense would, 
no doubt, take a similar position with respect to rule-making in- 
volving "military functions." It has also been claimed that the gen- 
eral nature of the subjects involved in this kind of rule-making, or 
the general nature of these functions, justifies the unqualified ex- 
emptions found in section 553(a)(1), since rule-making involving 
"military or foreign affairs functions" touches on matters of a pecu- 
liarly sensitive and delicate nature. Thus, the Department of State 
has noted that "where foreign policy considerations may be para- 
mount ... it is readily apparent that the Department requires a 
free hand to be able to discharge its missions."^^® Application of 
section 553 to rule-making involving "foreign affairs functions" is 
consequently said to be inappropriate. Also of significance is the 
statement that "freedom of executive action has long been regarded 
as necessary and desirable" in any function involving "foreign affairs 
of the United States. "^^^ "[S]uch rules, by their very nature, are not 
generally adaptable to notice or public rulemaking proceedings. "^^^ 

More specifically, the Department of Commerce has stated that 
the "processes of international negotiation and the administration of 
international agreements . . . simply do not lend themselves to the 
formal rulemaking requirements set out in section 4 . . . ."^^* The 
Department of the Treasury has made a similar statement with re- 
gard to the operations of its Office of Foreign Assets Control. It main- 

195. Letter from William B. Macomber, Jr., Assistant Secretary of State, to Senator 
James Eastland, April 10, 1967, in S. 518 Hearings, supra note 127, at 388. 

196. S. 1663 Hearings, supra note 104, at 387. 

197. 1969 Survey Response (Department of the Treasury, Office of Foreign Assets 

198. 1957 House Survey, supra note 39, pt. 9 (Department of State), at 927. 

199. S. 518 Hearings, supra note 127, at 373 (Department of Commerce). 


tained that section 553 procedures were inappropriate to the "foreign 
affairs functions" of the Office for the following reason, among others: 

[W]hen a partial relaxation of an embargo is contemplated in a par- 
ticular area, the basic policy decision is either a foreign policy deci- 
sion which it is not practicable to hold hearings on — or it is an 
administrative policy decision that the economic warfare objectives 
of the Control would not be jeopardized by the contemplated relaxa- 
tion. In either case, the decision is not one which can usefully be 
subjected to public hearings.^oo 

The Department of State has similarly suggested that the actual 
formulation of foreign policy as such is a singularly inappropriate 
subject, by its nature, for formal rule-making procedures. The 
Department noted: 

Last year the Government of France made clear that it was no 
longer willing to participate in the military activities of the North 
Atlantic Alliance. This French decision required the United States to 
re-examine its policies toward France and in relation to the North 
Atlantic Treaty Organization. These policy determinations ranged 
from the most specific — such as where NATO headquarters should 
be relocated and what claims the United States and NATO should 
press vis-a-vis France — to the most general — such as how to organize 
and operate an effective NATO without France and how to conduct 
Western relations with the Soviet Union and Eastern Europe. 

Could a formal rule-making proceeding have made a meaningful 
contribution to policy determinations such as these? . . . [W]e should 
note that there are no statutory standards here to be interpreted or 
developed through rule-making. The problem of the Executive 
Branch in dealing with questions of European security is quite dif- 
ferent from that confronting a regulatory agency operating under a 
statutory grant of authority.^oi 

As a result, the Department concluded, "The inappropriateness and 
impracticability of applying the formal procedures of the Adminis- 
trative Procedure Act to the functioning of the Department of 
State in the field of foreign policy" is clear.^"^ 

On a similar basis it may, of course, be argued that "the inap- 
propriateness and impracticability of applying the formal procedures 
of the Administrative Procedure Act to the functioning of the 
Department of" Defense in the performance of its "military func- 
tions" is clear. It can be maintained with a vigor equal to that of 
the Department of State that formulation of strategic military 

200. 1969 Survey Response (Department of the Treasury, Ofl&ce of Foreign Assets 

201. S. 518 Hearings, supra note 127, at 321-22. 

202. Id. at 321. 


policy, including the drawing up and adoption of battle plans for 
various eventualities, and the organization, deployment, and use of 
the armed forces as part of those plans, is also, by its nature, a 
singularly inappropriate subject for formal rule-making procedures. 
There are typically "no statutory standards here to be interpreted 
or developed through rule-making," just as there are said to be 
none in the foreign policy example offered by the Department of 

There are a number of difficulties inherent in the above argu- 
ments. In the first place, is it a foregone conclusion that merely be- 
cause there are no statutory standards to guide an administrator in 
his formulation of policy, public participation is either unsuitable 
or undesirable? The answer to this question seems clearly to be "no." 
One of the chief benefits of public participation is the education of 
the administrator with respect to any and all matters that may be 
relevant to his making a wise rule-making decision. The public's 
ability to do this is in no way diminished by the lack of statutory 
standards ultimately available to guide the decision maker. In- 
deed, because of this lack, public participation may be even more 
desirable in such cases than where more detailed strictures are pro- 
vided by Congress. 

Second, is it also clear, for instance, that the public would have 
had nothing of value to contribute to foreign policy formulation, 
which the Department of State viewed as singularly unfit for section 
553 procedures? If it had been provided an opportunity to do so, 
might the public have had something worthwhile to contribute to 
the formulation of Viet Nam policy in the early 1960's? Only a firm 
belief in official omniscience and public impotency would dictate a 
negative answer for all such situations. Such a conclusion would 
also be particularly out of place in a country like ours committed to 
the democratic process and sovereignty of the people. 

Nevertheless, section 553 procedures are undoubtedly inappro- 
priate in the formulation of armed forces strategic war plans, or in 
the formulation of foreign policy, such as our posture toward France 
when she terminates her association with NATO. But, as will be 
noted shortly, there are other reasons than the mere lack of statutory 
standards or the particular nature of the policy decision in question 
that dictate the unreasonableness of any requirement of public 
participation in "military or foreign affairs" decisions of this par- 
ticular type. The fact that these types of policy formulation or "rule- 
making" will be shown to deserve exemption from usual section 
553 procedures does not, however, justify the much wider scoped 


and unqualified exemption of subsection (a)(1). These examples 
prove only that there are specific types of rule-making or specific 
situations — perhaps encountered more frequently in rule-making 
involving "military or foreign affairs functions" than with most 
other kinds of rule-making — in which usual rule-making procedures 
are inappropriate. These examples of situations in which an exemp- 
tion from usual procedures is warranted do not, however, prove 
that all subsection (a)(1) rule-making, or even the overwhelming 
bulk of it for that matter, would suffer any more from subjugation 
to the terms of section 553 than other rule-making already included 
therein. Nor do they prove that section 553 procedures are any more 
inappropriate to all such rule-making because of its peculiar nature, 
than to other rule-making currently covered by that section. 

Was the Department of Defense correct when it offered as an 
example of a "horrible" the fact that absent the "military function" 
exemption — which it thought necessary and desirable — its rule- 
making involving ROTC programs at civilian universities would 
become subject to section 553? Is the Department of State correct 
when it assumes that all rule-making involving the International 
Educational Exchange Service is necessarily inappropriate for the 
application of section 553 procedures?^^^ One is hardly shocked by 
the general proposition that rule-making involving these programs 
should be subjected to the normal requirements imposed by section 
553(b)-(e) including, of course, its narrow exceptions for special 
circumstances that will be discussed in more detail later. 

There is no doubt, however, that agencies making rules involv- 
ing "military and foreign affairs functions," as with other functions, 
must be able to react quickly in emergency situations, or in any 
other circumstance where the proper performance of their functions 
requires rapid action. There are many such situations, and they 
probably occur with greater frequency in rule-making involving 
subsection (a)(1) functions than in rule-making involving other 
functions. The Treasury Department has stated, as an example, 
that three recent changes in rules involving "foreign affairs func- 
tions" could not have followed usual procedure because they "were 
prompted by the immediately impending effective date of amend- 
ments to social security legislation effecting payments to certain 
alien beneficiaries, and implemented assurances, which had to be 
acted upon expeditiously."^^^* The same department has also stated 

203. 1957 House Survey, supra note 39, pt. 9 (Department of State), at 931. 

204. 1969 Survey Response (Department of the Treasury, Bureau of Accounts and 
Treasurer's OflBce). 


with regard to the rule-making conducted by the Office of Foreign 
Assets Control that "it is often essential in issuing public documents, 
that the Control act without delay. "^^^ Consider also the following 
comment by a Department of State official dealing with the need for 
an exclusion from usual rule-making procedures for the formulation 
of certain foreign policy, based upon the need for speed alone. 

Let us take another, very recent example of a problem situation 
in foreign policy — one in which the speed of developments would 
have made impractical the application of Administrative Procedure 
Act procedures to the decision-making process. I invite the Subcom- 
mittee to consider last month's military coup in Greece. 

Immediately upon the occurrence of that coup and in the days 
thereafter the Department of State was confronted with a range of 
issues, some of which required immediate decision. There was the 
question whether to communicate with those who had seized power 
and in what fashion, what attitude to take toward the seizure, 
whether action needed to be taken for the safety of Americans, how 
we might most effectively promote a return to democracy within 
Greece, and a number of other issues. I do not think it can seriously 
be argued that there was time for such a proceeding.^o® 

In order to discharge their obligations properly, therefore, 
agencies making rules involving "military or foreign affairs func- 
tions" must be able to respond quickly when the need arises. That 
is, they must be able to alter their rules at once when immediate 
action is necessary to accomplish or preserve the objectives of their 
programs. In such a situation there is no time to publish advance 
notice of the rules in question, to provide an opportunity for pub- 
lic participation therein, or to delay their effective date. These re- 
quirements must be set aside where necessary speedy action would 
be impaired. The formulation of foreign policy and strategic mili- 
tary plans will very often fit within this circumstance because speed is 
frequently of the essence in those particular sorts of policy-making. 

There are also specific occasions involving subsection (a)(1) 
rule-making in which advance public procedures of the type listed in 
section 553 may either cause the very evil that the proposed rules 
are designed to avoid, seriously impair the ability of the agency to 
perform its "military or foreign affairs function," or produce other 
serious undesirable consequences. In those particular circumstances 
an exemption from usual procedures for subsection (a)(1) rule-mak- 

205. 1969 Survey Response. 

206. S. 518 Hearings, supra note 127, at 322 (Mr. Leonard Meeker, Legal Adviser, 
Department of State). 


ing is obviously necessary. An exam[jle is furnished by the Depart- 
ment of the I'icasury: 

In general, rulc-ni'iking by the Office of Foreign Assets Control 
involves forei'-n affairs functions of the United States. l"he chief 
rule-making activity of the Office involves the iiii|JOsition of a trade 
and fuiancial embargo on (juasi-enciny countries. It would be im- 
possible to liavc notice and public he:aiiig }nior to iin]->osition of 
such :m euii.KU-go. For example, if it were publicly known that the 
United States v/ere definitely going to impose a financial eml^argo on 
a particidar country at a certain time, there would within a matter 
of several hours be a virtually complete transfer of all its puf)lic and 
private liquid assets to other countries. Obviously, therefore, public 
hearings would nullify the proposed embargo cntirely.-'^'^ 

A similar point may be made about the Textile Program adminis- 
tered by the Department of Labor. That ridc-making is said to be 
exempt from section 553 because of the "foreign a/Iairs function" 

The program includes negotiation of internal ional bilateral agree- 
ments with foreign countries concerning cotton textiles and cotton 
textile produces requests by the United States that a country or 
countries vohnitarily linut tjieir exjiorts to the Unite;! States of cate- 
gories of cotton textiles or products not to exceed a specific level; 
and, under certain circumstances, unilateral imposition by the United 
Stales of import controls on lurh shipments to the United States. 
The program also includes administration of the multilateral agree- 
ment (the Long Term Arrangement Regardip.g International Tiade 
in Cotton Textiles, of February 9, 1962). 

Compliance v.ith the notice requirements of section 4 could 
stimulate exports from foreign countries and imports into tl'.e United 
States of great quantities of goods which miglit later be subject to 
ceiling limits. Such action might have an adverse effect on the textile 

Other statements of a more general nattirc have suggested differ- 
ent evils that might be catised if some section 553(a)(1) nile-making 
were reqtdrcd to follow usual procedures. For example, the Depart- 
ment ^^f Justice Jiotcd that a 

207. 1969 SuiVv.y Response. Sec also S. 166J Hearings, supra note 104, at ^92 (Dc- 
parlincal of ihc Ticasuiy): 

If, for example, notice of an ort'.cr (a rule under the definitions in the bill) 
to block llie a.^sets in the Unit'.:il Ktatcs of ccilain foreign nationals v.ere ^'iven, 
the holders of the as>cts would have opportunity to withdraw then before ihc 
aciioa could bo taken. I£ noiite were vjiven of proposed regulations resiriciinj 
tlie export or import of gold or its ii?o abroad by persons under U.S. juriscb'ttion, 
speculation would be inevitable and the effectiveness of the regulations would 
be reduced. 

203. S. 518 Hearings, supra note 127. at 241. 


requirement of public participation in all proceedings for the pro- 
mulgation of rules to govern our relationship with other nations . . . 
inevitably would encourage public demonstrations by extremist 
factions which might embarrass foreign officials and seriously preju- 
dice our conduct of foreign affairs.^oo 

This suggestion that the possibility of public protest over proposed 
rules involving our foreign affairs should itself be deemed a suffi- 
cient ground upon which to dispense with the normal procedures 
seems, at best, dubious. One need not, however, agree with that con- 
clusion to agree with another. Federal agencies making rules in- 
volving "military or foreign affairs functions" must be freed from 
the rule-making requirements of advance notice and public partici- 
pation when adherence to these requirements would induce serious 
undesirable consequences that the government has a right to avoid, 
such as frustrating the immediate or ultimate purposes for which 
the rules are made. 

Most strategic military policy formulation and most strategic 
foreign policy formulation, if they are "rule-making," will need to 
be exempted from usual rule-making procedures on this basis. Ad- 
herence to section 553 requirements for these particular kinds of 
rule-making will usually either cause the very evil sought to be 
avoided, or will frustrate the immediate or ultimate purposes of the 
rule-making involved, or will otherwise seriously impair the ability 
of the agency to perform its "military or foreign affairs functions" 
properly. That is, publication of advance notice prior to the adoption 
of strategic military or foreign policy plans will usually seriously 
interfere with or destroy their utility; such advance publication may 
also cause serious harm to our nation's ability to defend itself 
effectively or to protect its interests abroad. Illustrations of this kind 
of policy-making for which an exemption from usual procedures is 
necessary for the above reasons probably include the State Depart- 
ment's exaimples with respect to France and Greece, cited earlier in 
this section. Other examples are such things as policy formation with 
regard to the military steps we will take in any given circumstance 
if our country, its possessions, or our armed forces or citizens abroad 
are attacked or threatened, and the precise nature of our political 
and military response to the capture of an American ship at sea by 
a foreign power. 

Of course, any rule-making that is exempted from the publica- 

209. S. 1663 Hearings, supra note 104, at 363. See also id. at 392 (Department of 


tion requirements of the freedom-of-information provision of the 
APA because it is "specifically required by Executive order to be 
kept secret in the interest of the national defense or foreign policy''^^^^ 
must similarly be excepted from the usual advance notice and public 
participation requirements of section 553, After all, if the rules in- 
volved "should be kept confidential in the national interest,"^^^ it is 
hardly possible, without violating this confidentiality, to give advance 
notice of the type required by section 553 and to accord the public 
an opportunity to comment thereon. This, too, would have the effect 
of excluding most strategic military planning, most strategic foreign 
policy planning, and some other rule-making that involves "military 
and foreign affairs functions" generally, from usual rule-making 
procedures required by section 553. 

Another situation in which some section 553(a)(1) rule-making 
should be exempt from the usual requirements of public participa- 
tion may be posited. In certain instances all of the pertinent or use- 
ful information relating to the form and desirability of a given rule 
is necessarily within the exclusive possession of the national govern- 
ment because, for example, that information is a military secret 
or otherwise privileged from disclosure. Advance notice of the pro- 
posed rule and an opportunity to participate therein would be use- 
less and a predictable waste in that situation because the public 
could not, by definition, contribute anything of real value to improve 
the product of the agency's decision-making process. Requiring ad- 
herence to usual procedures in such cases would, therefore, be 
unreasonable. Situations of this type undoubtedly occur more fre- 
quently in rule-making that involves a "military or foreign affairs 
function" than in rule-making that involves other functions. 

The Department of Treasury, for example, has justified the 
exemption of section 553(a)(1) rules promulgated by its Office of 
Foreign Assets Control on the ground that 

the matters with which the Control deals are almost invariably 
confidential. Frequently, the most important and confidential foreign 
or military affairs activities of the United States are involved. From 
the private viewpoint substantially all activities of the Control cover 
privileged matters.212 

A somewhat expanded version of this last view has been expressed 
by the Department of State as a basis for excluding rule-making in- 

210. 5 U.S.C. § 552(b)(1) (1970). 

211. S. 1663 Hearings, supra note 104, at 392 (Department of Treasury). 

212. 1969 Survey Response. 


volving "military or foreign affairs functions" from usual procedures. 
It first notes that "in the making of foreign policy decisions much 
of the information that must be relied upon is not publicly available 
and indeed cannot be made public."^^^ This has "necessarily led to 
different procedures than would otherwise prevail. "^^^ The rationale 
for the different procedures was more fully explained as follows: 

[FJormal rule-making procedures seem primarily intended for and 
work best in situations where the rule-maker can be assisted through 
a presentation of the interplay of all interests at stake. In the case 
of a rule-making proceeding in the field of foreign policy, however, 
it seems clear that in many cases the most important considerations 
would fail of representation. Only the Department would be privy to 
many such considerations and often it could be awkward and of 
possible embarrassment to relations with other countries for the De- 
partment to bring these considerations to the fore. The result would 
be that the rule-making proceeding, far from affording an elucida- 
tion of the reasons behind a policy decision, would provide a dis- 
torted picture of the decision-making process.^i^ 

More specifically, the Department of State noted in 1957 that the 
Passport Office "does not . . . invite public participation in rule- 
making. Many of the changes are quickly made as the result of 
confidential information concerning the international situation, the 
disclosure of which might affect foreign relations."^^^ 

One can hardly quarrel with the assertion that exemption from 
usual rule-making procedures should be provided in those particular 
cases where all relevant or useful information necessary to the making 
of the specific policy decision involved is within the exclusive posses- 
sion of the government because it is secret "in the interest of the 
national defense or foreign policy,"^^'' or because it is otherwise 
privileged. However, one may question why normal rule-making 
procedures should also be dispensed with when only some of the 
information relevant to a fully informed policy choice is in the ex- 
clusive possession of the government. To the extent that the public 
can, through normal participation procedures, add to the storehouse 
of information maintained by the agency on the subject, the ultimate 
decision may be improved. That is, the mere fact that some informa- 
tion directly relevant to the rule-making decision in question is 
within the exclusive possession of the government does not vitiate 

213. S. 518 Hearings, supra note 127, at 322 (Mr. Leonard Meeker). 

214. Id. at 388 (Department of State). 

215. Id. 

216. 1957 House Survey, supra note 39, pt, 9 (Department of State), at 946. 

217. 5 U.S.C. § 552(b)(1) (1970). 


the usefulness of a section 553 proceeding since other directly rele- 
vant information is available to the public. As a consequence, the 
agency still may learn something from the public's participation. 
The fact that the agency may finally make its decision in such a case 
on the basis of that information justifiably held secret does not 
change this conclusion. Public participation procedures were not 
intended to inform the public; rather, they were intended to educate 
the agency. Indeed, under normal section 553 procedures the public 
will not even know the precise content of the materials submitted 
in the rule-making process unless those who make such submittals 
to the agency publicize their contents, or unless some member of 
the public specifically demands to see those materials, as he has a 
right to do under the freedom-of-information provision of the Act.^^s 

On the other hand, this line of reasoning may be vulnerable on 
the ground that an exception limited to the situation where all of 
the information relevant to the rule-making decision is necessarily 
within the exclusive control of the agency is illusory. In every case 
where a rule involving a "military or foreign affairs function" is 
made, some relevant and important information bearing on that 
decision will be available to the public. More importantly, however, 
the Department of State has made a good point when it asserts that 
public procedures are inappropriate for those cases of rule-making 
where the ultimate decision is likely to be made on the basis of 
information that is necessarily in the exclusive possession of the gov- 
ernment. In such cases, opinions expressed to the agency by members 
of the public availing themselves of the opportunity furnished by 
section 553 will usually be of little value since they are based on 
incomplete information. The agency, therefore, is unlikely to give 
them great weight. 

Public participation in such cases might, however, still be of 
value in assuring that the decision maker is fully informed since it 
may induce submission to the agency of some important relevant 
information that is in the public sector and not previously known 
by the agency; or it may furnish the agency with opinion, based on 
information in the public sector, that is of substantial value in mak- 
ing the ultimate decision. In terms of a cost-benefit analysis this may 
suggest that public procedures are worth the cost even when some 
of the information directly relevant to the decision is not available 
to the public because it is privileged. On the other hand, those pro- 
cedures are not worth the cost when the information that is neces- 

218. 5 U.S.C. § 552 (1970). 


sarily the most important or relevant factor in making the final 
rule-making decision is not available to the public. Consequently, it 
may be desirable to exempt rule-making involving a "military or 
foreign affairs function" from normal procedural requirements in 
the latter case but not in the former. 

There is another class of situations involving subsection (a)(1) 
rule-making in which adherence to the usual procedures involving 
advance notice and an opportunity to participate may be deemed 
unreasonable. A situation occasionally arises in which the rule-mak- 
ing in question is so insignificant or minor in nature and impact that 
utilization of these procedures may be a complete and predictable 
waste. A rule requiring persons receiving passports to sign them in 
ink or ball point rather than in pencil or crayon surely does not 
require public participation — nor, of course, do technical or other 
purely ministerial amendments to an existing rule. Rule-making of 
this sort should, therefore, not be subject to usual section 553 pro- 

Previous discussion demonstrated that in certain types of cases 
rule-making involving "military or foreign affairs functions" should 
not be required to follow the usual procedures mandated by section 
553. Specific situations exist in which the policies favoring public 
participation in rule-making are outweighed by the conflicting need 
to operate our government efficiently, expeditiously, effectively, and 
inexpensively. These situations, however, break down into a number 
of well-defined classes that can be dealt with individually. They do 
not, therefore, constitute an adequate justification for the exemption 
of all rule-making activity involving the excepted functions; rather, 
they only suggest that suitable, narrowly drawn exceptions be pro- 
vided for these particular types of cases. As subsequent discussion 
will demonstrate, a more narrowly tailored exemption already on 
the statute books can deal adequately with those cases of section 
553(a)(1) rule-making that need special treatment. Consequently, no 
persuasive reason appears to justify continuation of the present un- 
qualified and across-the-board exemption for all rule-making involv- 
ing "military or foreign affairs functions." 

A number of federal agencies making rules of this sort have at 
least tacitly recognized that an unqualified exemption for all rule- 
making involving these functions is unnecessary. The Department 
of State, for example, has noted that section 553 procedures are 
appropriate for at least some rule-making involving "foreign affairs 
functions." In the course of congressional hearings on administra- 


tive-prcx;edure reform, a spokesman for the Department emphasized 

I want to make perfectly clear that I am not proposing that formal 
procedures are inappropriate to the exercise of all foreign affairs 
functions. I do believe that the Department is already fulfilling the 
underlying purposes of the proposed amendments to the Administra- 
tive Procedure Act in those cases where formal procedures are suit- 

(This last point is, of course, debatable.) Consider also in this con- 
nection the following additional statement by the Department of 

With respect to its regulatory activities, the Department has in 
the past published notice of proposed rulemaking in those areas 
not vitally impregnated with foreign poUcy considerations. Examples 
of this are found in various routine visa procedures. There are, how- 
ever, other areas where foreign policy considerations may be para- 
mount. In such areas, it is readily apparent that the Department 
requires a free hand to be able to discharge its mission. Examples of 
this are the determination of geographical limitations of general 
applicability on the issuance of passports and munitions control area 
in toto.220 

Referring to its rules involving "military and foreign affairs 
functions," the Department of the Treasury similarly asserted that 
"in many instances public participation in rule-making would be 
desirable, although not required with respect to the matter specified. 
The determination in any specific case, however, would have to be 
made with reference to the controlling facts and circumstances."22i 
The Department of Defense has also tacitly admitted that an un- 
qualified, across-the-board exemption for all rule-making involving 
"military functions" is unnecessary by voluntarily following section 
553 procedures for at least some rule-making that may involve a 
"military function."222 

It may be argued that since usual rule-making procedures are 
inappropriate for a substantially larger portion of subsection (a)(1) 
rule-making than for most other kinds of rule-making, the whole 

219. S. 518 Hearings, supra note 127, at 322 (Mr. Leonard Meeker). 

220. S. 1663 Hearings, supra note 104, at 387. 

221. 1957 House Survey, supra note 39, pt. 10 (Department of the Treasury), at 1017. 

222. Id., pt. 3 (Department of Defense), at 286: "Many of the rules considered 
herein are of military or naval significance. Since the procedures in paragraph 4 of the 
Administrative Procedure Act are followed in all cases, there has been no need to 
characterize particular rules as involving or not involving military or naval functions." 


class — all "military and foreign affairs function" rule-making — 
should be exempted from section 553 without qualification. The 
argument is that the burden of individually excluding, on a case- 
by-case basis, each one of those many particular instances of such rule- 
making that should be excluded from normal procedures is too great, 
when compared to the benefits obtained from those relatively few 
cases in which such rule-making should follow usual procedures. 
This view ought to be rejected for several reasons. 

First, the number of situations in which rule-making involving 
"military or foreign affairs functions" should follow usual section 
553 procedures is probably much larger than the affected agencies 
would admit. Closer examination reveals that in many of the in- 
stances of such rule-making for which agencies claim exemption 
from section 553, the claims are unjustified in terms of actual need. 
What is more, past performance suggests that the overly broad 
exclusionary actions of the agencies with respect to public participa- 
tion in these kinds of rule-making are unlikely to change very much 
absent a statutory requirement to the contrary or the credible threat 
of such a requirement. Second, the policy in favor of public participa- 
tion is so weighty that it should be rejected only if the burden of 
administering a system of more narrowly tailored exemptions than 
those presently found in subsection (a)(1) is unduly large. As will be 
demonstrated, this is not a problem here. An existing, narrowly 
tailored exemption can exclude appropriate subsection (a)(1) rule- 
making from usual procedures without excluding rule-making un- 
deserving of that treatment; and it can do so without imposing an 
unduly large administrative burden on those charged with deciding 
whether particular rule-making involving these functions must follow 
ordinary procedures or is exempt from them for good cause. 

One last point should be noted with respect to the undesirability 
of the existing subsection (a)(1) exemptions. Discussion in earlier 
portions of this Article has demonstrated the vagueness of the terms 
"military function" and "foreign affairs function." The unusually 
large difficulty encountered in any effort to define satisfactorily their 
exact scope has meant, in practice, that they are susceptible to very 
wide application by agencies colorably entitled to rely on them. As 
a consequence, section 553(a)(1) is also undesirable because its ex- 
cessive vagueness facilitates more widespread evasion of the con- 
gressionally willed policy of public participation in rule-making than 
Congress is likely to have intended. At the very least, this suggests 
that subsection (a)(1) should be replaced with terms that are less 
vague and more easily definable in practice. As noted, however, this 


is only an additional reason why section 553(a)(1) should not be 
continued. The chief reason this exemption should be eliminated 
is that it is unqualified and overbroad and, therefore, not justifiable 
on its merits. 

V. Are Existing Exemptions Adequate To Support 
A Flat Repeal of Section 553(a)(1)? 

Previous discussion has demonstrated that agencies making rules 
involving "military or foreign affairs functions" must have freedom 
to ignore usual rule-making procedures in various types of situations. 
A flat repeal of section 553(a)(1) without more is, therefore, justified 
only if other existing exemptive provisions would satisfactorily ac- 
complish this result. The following discussion will examine legiti- 
mate agency needs for avoiding usual procedures in rule-making 
involving "military or foreign affairs functions," and determine 
whether existing exemptions, other than subsection (a)(1), can ade- 
quately meet these needs. 

A. The Secrecy Exemption of Section 552(h)(1) 

Agencies must be allowed to ignore section 553 in those cases 
where the rule involving a "military or foreign affairs function" 
must be kept secret because of the harm to our "national defense or 
foreign policy" that would occur if it were made public. It seems 
clear, however, that where a rule is required to be kept secret under 
section 552(b)(1), the freedom-of-information section's exemptive 
provision, agencies may properly ignore usual rule-making require- 
ments entirely without adversely affecting the validity of the rule in 
question. Similarly, when an "Executive order" under section 552 
(b)(1) mandates that the reasons for a rule, as opposed to the rule 
itself, be kept secret in the interest of "national defense or foreign 
policy," agencies would be excused from the section 553(c) require- 
ment that the adopted rules incorporate "a concise general statement 
of their basis and purpose." The point is that in the formulation and 
promulgation of valid rules, agencies may ignore usual rule-making 
procedures to the extent that adherence to those procedures would 
interfere with a lawful secrecy requirement imposed by an executive 
order issued pursuant to section 552(b)(1). 

The present exemption from section 553 for rule-making involv- 
ing a "military or foreign affairs function" is in no way necessary 
to accomplish this result. If pursuant to an exemption from the free- 
dom-of-information section an agency must keep certain rules secret, 


or has the discretion to keep certain rules secret, advance notice and 
an opportunity for public comment thereon can be dispensed with 
despite the requirements of section 553. In such cases the effectiveness 
of the rules involved would not be impaired because it seems obvious 
that the publicity requirements of section 553 must be inapplicable 
to rules that are required to be kept secret or may be kept secret pur- 
suant to a specific exemption from section 552. Section 552(b)(1) itself 
would, therefore, seem to dictate that if certain rules or the reasons 
therefor are "specifically" required to be kept secret in the interest 
of "national defense or foreign policy" by an "Executive order," 
they are necessarily exempted from all inconsistent requirements of 
section 553. That is, an agency is not required to violate a proper 
section 552(b)(1) executive order to comply with any provision of 
section 553. This reading of section 552(b)(1) against section 553 is 
the only sensible way to reconcile what otherwise might be conflict- 
ing demands imposed by the two sections. Furthermore, the only 
situation in which an agency should be able to invoke secrecy as a 
ground to justify avoidance of any usual rule-making procedures, is 
when it may lawfully keep the rule, or the reasons therefor, secret 
under section 552. Otherwise, it would be seeking to use secrecy as 
a basis upon which to avoid usual rule-making procedures in a situa- 
tion where section 552 confers upon the public a right to discover the 
contents of the rule or the reasons for it. 

It is clear that the term "secret" in this context means only that 
the relevant matter needs to be kept confidential in order for the 
agency to perform properly the function to which that matter per- 
tains. That is, it 

is not intended in the sense of the technical security classification 
"secret" as defined in Section 1(b) of Executive Order 10501, Safe- 
guarding Official Information, but rather in the broad sense of 
matters which in the interest of [national defense or] foreign policy 
should not be prematurely disclosed, as for example, while interna- 
tional negotiations are pending or before restraint determinations 
have been arrived at.223 

Section 552(b)(1), therefore, insulates from any inconsistent require- 
ment of section 553, all facets of section 553(a)(1) rule-making that 
must be kept secret in the broader sense because publicity would 
in some way be injurious to the successful conduct of our "national 
defense or foreign policy." To read section 552(b)(1) and section 553 

225. S. 518 Hearings, supra note 127, at 373 (Department of Commerce). See 3 C.F.R. 
806. 307 (1972). 


differently would be out-of-step with the purpose behind the recent 
addition of the former's language to the APA. 

Consequently, even if internal agency planning is regarded as 
"rule-making" under the APA, virtually all strategic "military and 
foreign affairs function" planning would be exempt from the require- 
ments of section 553 on this basis. Secrecy with respect to strategic 
planning will invariably be required by executive order because 
revealing such plans will usually interfere with the very purpose 
they seek to achieve — an advantage over our adversaries. As will 
be seen, this is not the only basis under existing law whereby such 
strategic planning, assuming it is deemed rule-making, would be 
exempt from usual rule-making procedures in the event section 
553(a)(1) is repealed. 

B. The Sections 553(h)(B) and 333(d)(3) Exemptions 

While section 552(b)(1) may enable agencies to ignore usual 
procedural requirements when they make section 553(a)(1) rules 
that must be kept secret, what provisions may be used to exempt 
the other situations mentioned earlier in this Article? If subsection 
(a)(1) were repealed, would other exemptions assure that agencies 
making rules involving "military or foreign affairs functions" could 
ignore usual procedures when they need to react quickly in emer- 
gency situations? Would other exemptions assure that agencies mak- 
ing such rules could ignore usual procedures when adherence to them 
would cause the very evil that the rule seeks to avoid, defeat the 
purpose of the rule, or result in other undesirable consequences? 
Are usual procedures for making such rules currently avoidable 
under exemptions other than subsection (a)(1) if the most important 
information relating to the rules' form or desirability is necessarily 
within the exclusive possession of the national government? Are the 
usual procedures currently avoidable under other exemptions for 
rules that are so insignificant or minor that public procedures are 
predictably a complete waste of effort? As subsequent discussion will 
demonstrate, the answer to all of the above questions is "yes." 

According to section 553(b)(B), the provisions of section 553(b)- 
(c) are inapplicable "when the agency for good cause finds (and incor- 
porates the finding and a brief statement of reasons therefor in the 
rules issued) that notice and public procedure thereon are imprac- 
ticable, unnecessary, or contrary to the public interest." This exemp- 
tion from two subsections of section 553 deserves careful examination. 
It may satisfactorily handle all of the problems that would arise if 


the current exemption for rule-making involving "military or foreign 
affairs functions" were repealed. And it may do so in a manner nar- 
rowly tailored to fit the specific problem. Section 553(b)(B) is espe- 
cially narrowly tailored because it is qualified and limited, and 
requires an administrative assessment of the particular facts and 
circumstances surrounding each case of rule-making to which it is 
sought to be applied. The reports of the Senate and House com- 
mittees responsible for the APA clearly stated: 

The exemption of situations of emergency or necessity is not an 
"escape clause" in the sense that any agency has discretion to dis- 
regard its terms or the facts. A true and supported or supportable 
finding of necessity or emergency must be made and published.224 

By this, the committees intended to establish a restrictive meaning 
for the phrase "when the agency for good cause finds," which precedes 
the enumeration of the grounds upon which this particular exemp- 
tion is available. 

Therefore, the agencies are required under this provision to make 
specific findings, and thus to meet what has been interpreted to be 
a strict standard, before they can avail themselves of the exemption. 
Although some commentators have argued that the courts should 
not examine the accuracy of the required administrative finding 
when the validity of an agency's use of this exemption arises in liti- 
gation,225 this finding is clearly judicially reviewable on the same 
basis as any other finding committed to an agency's judgment.^^^ 
Thus, if the finding is "arbitrary, capricious, an abuse of discretion 
or otherwise not in accordance with law" or is "unsupported by sub- 
stantial evidence" based on the whole record, it will, in a proper suit, 
be set aside and the promulgated rule rendered invalid.^^'^ Of course, 
in such cases the presumption of validity will be, as it always is, with 
the administrative agency, and the burden of overturning its finding 
will rest upon the assailant. 

224. Legislative Hictory, supra note 13, at 200, 258. See also id. at 358 (remarks 
of Representative Walter). 

225. See R. Parker, Administrative Law 182-83 (1952); Nathanson, Some Com- 
ments on the Administrative Procedure Act, 41 III. L. Rev. 368, 384-86 (1946). 

226. See Texaco, Inc. v. FPC, 412 F.2d 740 (3d Cir. 1969); Durkin v. Edward S. 
Wagner Co., 115 F. Supp. 118 (E.D.N.Y. 1953), affd. per curiam sub nom. Mitchell v. 
Edward S. Wagner Co., 217 F.2d 303 (2d Cir. 1954), cert, denied, 348 U.S. 964 (1955). 
See also National Motor Freight Traffic Assn., Inc. v. United States, 268 F. Supp. 90 
(D.D.C. 1967). In this last case, it is not clear whether section 553(b)(B) or section 
553(b)(A) was involved. 

227. 5 U.S.C. §§ 706(2)(A), (2)(E) (1970). See also cases cited in note 226 supra. 
But see Chicago & S. Air Lines v. Waterman S.S. Corp.. 333 U.S. 103 (1948), discussed 
in text accompanying note 255 infra. 


There is one interpretation of section 553(b) (B) that should be 
rejected at the outset. It can be argued that an agency seeking to 
come within the section 553(b)(B) exemption must find that it is 
"impracticable, unnecessary, or contrary to the public interest" for 
the agency to follow the procedures of section 553(b) in each separate 
rule-making case to which it seeks to apply the exemption, and that 
it cannot make that finding wholesale for any narrowly tailored class 
or group of rule-making situations. This interpretation relies upon 
certain somewhat ambiguous language in the provision, "when the 
agency for good cause finds (and incorporates the finding and a brief 
statement of reasons therefor in the rules issued)." It also relies 
upon the supposed intention of Congress to provide a means by 
which individual cases could be separately considered on their own 
merits, and an exemption granted only in those specific cases in 
which it was justified on one of the grounds stated. 

While the above argument has great merit and is a sound general 
rule by which to construe section 553(b)(B), it overlooks two points. 
First, it may be "impracticable, unnecessary, or contrary to the public 
interest" to follow usual section 553 procedures in every instance of 
a specific type of rule-making under a particular statute, when each 
such instance is viewed in isolation. In those circumstances it seems 
a waste to require repetitive and redundant findings and full publica- 
tion of those findings. As will be explained later, strategic military 
planning and strategic foreign policy planning are examples of this 
kind of situation. 

Second, there are also situations where compliance with the pro- 
cedures of section 553(b)-(c) is not "impracticable" or "contrary to 
the public interest" as applied to any single instance of rule-making 
on a given subject, but becomes so for a whole class if those require- 
ments must be followed for all such similar instances of rule-making. 
For example, so many different rules of a particular type may have 
to be issued within a short time period that affording notice and an 
opportunity to participate in every case would be practically impos- 
sible, and would frustrate the proper performance of the agency's 
functions or cause other substantial deleterious consequences. Rules 
promulgated for individual military bases by the commander of each 
base in light of its peculiar conditions and circumstances may pro- 
vide an example of this kind of situation. Certainly the day-to-day 
orders of military superiors to inferiors, if they are rules, would serve 
as an example. Procedures of the type specified in section 553 may 
not be "impracticable" or "contrary to the public interest" with 
respect to any one such determination viewed in isolation; but those 


procedures may become so when they must be applied to all such 

The exemption contained in section 553(b)(B), therefore, should 
be read to allow an agency to make the requisite finding for a whole 
class of rule-making. But this should be permitted only if the agency 
can make that finding either as to every individual instance of rule- 
making within the class considered separately, or as to every individ- 
ual instance of rule-making within the class because it would be 
"impracticable" or "contrary to the public interest" to impose section 
553 procedures in all instances. Of course, agencies must be required 
to draw classes for this purpose as narrowly as possible so that no 
more is excluded under this exception than is absolutely justifiable 
in terms of the statutory criteria. Overbreadth of any kind in de- 
lineating such a class of rules should not be tolerated. Consideration 
might also be given to shifting the burden of proof to the agency 
with respect to such group delineations as opposed to individual case 
delineations, and thus forcing the agency to justify its definition of 
the "class" of rule-making it seeks to exclude from usual procedures. 
Such a limitation, however, may not be necessary and may have some 
undesirable consequences. 

The Administrative Conference of the United States commented 
on this subject when it proposed the "Elimination of Certain Exemp- 
tions [found in section 553(a)(2)] From the APA Rulemaking Re- 
quirements." The Conference concluded: A section 553(b)(B) finding 
that adherence to usual procedures would be "impracticable, un- 
necessary, or contrary to the public interest . . . can be made, and 
published in the Federal Register, as to an entire subject matter 
concerning which rules may be promulgated. Each finding of this 
type should be no broader than essential . . . ."^^^ Similarly, while 
in the United States Attorney General's Office, Justice Rehnquist 
stated that "where it is evident to an agency that notice and public 
procedure will always be inappropriate to a particular class of rule- 
making, there is no objection to making this finding and basing 
future actions upon it." He suggested, however, that "a boiler plate 
recitation or incorporation by reference [of the class finding] must 
be published as part of each rulemaking action" because this "is 
more consistent with a literal interpretation of section 553(b)(B) and 
seems to me to be the better practice." Justice Rehnquist was more 
guarded in his response to the question, "whether an agency may 

228. Recommendation No. 16, supra note 8, at 29-30. 


determine that notice and public procedure are 'impracticable' with 
respect to a whole class of cases simply because of the unusually large 
number of cases involved and despite the fact that as to any one such 
case [viewed in isolation] such a procedure might not be imprac- 
ticable." After suggesting that this question cannot be "answered in 
the abstract," and expressing some uncertainty about its merits, he 
stated that "the language of section 553(b)(B) is not so clear as to 
preclude the interpretation . . . [suggested and] it does not appear 
that there is any authority which would rule out such an interpreta- 
tion." Finally, Justice Rehnquist suggested that any doubt on this 
issue could be completely eliminated "by legislative history made in 
the course of the consideration of [an] amendment" of the type being 
considered here.^^® 

The grounds specified in section 553(b)(B) upon which an agency 
may dispense with the usual rule-making procedures are stated in the 
alternative, so that any one of the three grounds listed is sufficient to 
invoke the exemption.^^" The first ground for a qualified exemption 
is when the notice and participation requirements of section 553 are 
found to be "impracticable." Webster's defines this term as mean- 
ing, among other things, "infeasible," "impractical, unwise, impru- 
dent."23i Earlier drafts of the APA would have made the exemption 
available when the public rule-making procedures were "impractica- 
ble because of unavoidable lack of time or other emergency, "^^^ but 
the qualifying language after "impracticable" was subsequently 
dropped. The Senate and House reports on the APA stated that "im- 
practicable" refers to a situation "in which the due and required 
execution of the agency functions would be unavoidably prevented 
by its undertaking public rulemaking proceedings."^^ 

The term "unnecessary," which is the second exemptive ground 
specified in section 553(b)(B), connotes something that is "not 
necessary: useless, needless."^^* The legislative history indicates that 
it must be unnecessary "so far as the public is concerned, as would 

229. Undated letter from William Rehnquist, then Assistant Attorney General, 
Office of Legal Counsel, to Jerre Williams, Chairman, Administrative Conference of 
the United States. 

230. Attorney General's Manual, supra note 13, at 30. 

231. Webster's, supra note 55, at 1136. 

232. Legislative History, supra note 13, at 140, 148, 157. See also id. at 181, a draft 
reading "impracticable because of unavoidable lack of time or other emergency affecting 
public safety or health." 

233. Id. at 200, 258. Accord. Attorney General's Manual, supra note 13, at 30. 

234. Webster's, supra note 55, at 2504. 


be the case if a minor or merely technical amendment in which the 
public is not particularly interested were involved,"^^^ On this basis, 
one court seems to have concluded that "unnecessary" applies to 
situations in which an agency rule is "minor or emergency in charac- 
fgj. "236 Qj. «' 'a routine determination,' 'insignificant in nature and 
impact,' and unimportant 'to the industry and to the public' "^^^ 

Rule-making is also exempted by section 553(b)(B) from advance 
notice and public participation when adherence to those procedures 
would be "contrary to the public interest." According to the APA's 
legislative history, this phrase "supplements the terms 'impracticable' 
or 'unnecessary'; it requires that public rule-making procedures shall 
not prevent an agency from operating and that, on the other hand, 
lack of public interest in rule-making warrants an agency to dispense 
with public procedure."23^ The Attorney General's Manual takes the 
position that " *[p]ublic interest' connotes a situation in which the 
interest of the public would be defeated by any requirement of ad- 
vance notice."^^' 

At some point during their legislative history, all three terms — 
"impracticable," "unnecessary," and "contrary to the public interest" 
— ^were referred to as operating "only where facts and interests are 
such that notice and proceedings are impossible or manifestly un- 
necessary,"2^° and as exempting "situations of emergency or neces- 
sity."^*^ However, the weight of their legislative history, as well as 
their language, clearly establishes that these terms were not meant 
to be so narrowly limited. At the same time, it must be remembered 
that these are qualified grounds for exemption and are not to be 
construed more broadly than the demands of sound government ad- 
ministration and wise public policy require. It is worth repeating 
that the section 553(b)(B) exemption is "not an 'escape' clause in the 
sense that any agency has discretion to disregard its terms or the 
facts."2^2 An agency can use this exemption only if it has "good 
cause" within the meaning of the APA. 

A more detailed description of how the section 55 3(b) (B) exemp- 

235. Legislative History, supra note 13, at 200, 258. See also Attorney General's 
Manual, supra note 13, at 31. 

236. Texaco, Inc. v. FPC, 412 F.2d 740. 743 (3d Cir. 1969), 

237. 412 F.2d at 743, citing National Motor Freight Traffic Assn. v. United States, 
268 F. Supp. 90. 95-96 (D.D.C. 1967). 

238. Legislative History, supra note 13, at 200, 258. 

239. Attorney General's Manual, supra note 13, at 31. 

240. Legislative History, supra note 13. at 358. 

241. Id. at 200. 258. 

242. Id. See text accompanying note 224 supra. 


tion might operate in practice demonstrates that it could satisfac- 
torily handle all the problems resulting from a repeal of section 
653(a)(1) — and in so doing, rationally accommodate the need for 
public participation in rule-making, on the one hand, with the need 
for efficient, effective, expeditious, and inexpensive government ad- 
ministration on the other. Although the terms "impracticable," "un- 
necessary," and "contrary to the public interest" overlap to some 
extent, an effort will be made to examine their applications sepa- 
rately. But in light of the very close relationship between these terms, 
the following analyses of their applications should also be considered 
as partially overlapping. 

Consider, first, the exemption for situations where public pro- 
cedures are found to be "unnecessary." This could undoubtedly 
perform the function intended by the exception for "minor revisions 
and refinements of rules," which is found in several bills that sought 
to rewrite section 553.^^^ Indeed, the existing language can probably 
do so more satisfactorily because it is more narrowly tailored. For 
example, the "unnecessary" exemption seems to cover situations 
where a rule is in fact so minor, such as the rule requiring passports 
to be signed in ink rather than in pencil, that public procedures 
would be a predictable waste. Under this exemption public proce- 
dures may also be dispensed with for rules announcing exact rates 
under statutes making the calculation of those rates purely minis- 
terial because, for example, the rate set must be a certain specified 
percentage of another known figure.^** Similarly, usual rule-making 
procedures are also "unnecessary" for mere technical changes in 
regulations. If, for example, the statutory citations contained in a 
regulation must be altered to conform to changes in the numbering 
of the United States Code, or regulations are rewritten or reorga- 
nized purely to improve their style, and without altering their sub- 
stance, it is obviously "unnecessary" to resort to public procedures. 

Additionally, if all or the most important information relating 
to the form or desirability of a rule is necessarily within the exclusive 
possession of the national government, a section 553 rule-making 
proceeding would seem unwarranted. In this circumstance, the pub- 

243. See. e.g., S. 1663. 88th Cong., 2d Sess. § 4(b)(2) (1964). 

244. See, e.g., 1957 House Survey, supra note 39, pt. 1 (Department of Agriculture), 
at 26-27. The Department may dispense with usual procedures, under the "unnecessary" 
exemption, for rules announcing the exact penalty rates applicable to marketing of 
certain commodities in excess of the farm marketing quota. The Department's action 
in those cases only involved a mathematical calculation, for the rates are set by law 
as a certain percentage of parity or support price of the commodity as of a particular 


lie could not contribute anything meaningful to improve the product 
of the agency's decision-making process. Thus, by definition, ad- 
herence to usual procedures in situations of this sort would be 
predictably unproductive, and hence "unnecessary." All, or the most 
important, information relating to the form or desirability of a rule 
may necessarily be in the exclusive possession of the national govern- 
ment because it is properly kept secret under section 552(b)(1). Ac- 
cording to the agencies involved, this is particularly true with re- 
spect to a substantial amount of the rule-making involving "military 
and foreign affairs functions."^^^ To the extent they are right, such 
rule-making may be exempted from usual procedure requirements 
by section 553(b)(B). 

Agencies should not be permitted to decide lightly that public 
procedures are "unnecessary" within the meaning of this qualified 
exemption. In Texaco, Inc. v. FPC^*^ the Court of Appeals for the 
Third Circuit considered an FPC regulation promulgated without 
resort to the public procedures of section 553(b)-(c). The regulation 
required natural gas companies to pay a compound interest rate, for 
the first time, on all amounts refunded to their customers because of 
overcharges resulting from new rates subsequently found to be un- 
justified. After considering all of the Commission's arguments, the 
court held that the rule was invalid because of the FPC's failure to 
follow the procedures of section 553(b)-(c) in its promulgation. 

The court in Texaco explained that "[t]he rule does not fall 
within the 'unnecessary' exception relied on by the Commission 
since it cannot be classified as either minor or emergency in charac- 
ter."24^ The judges refused to accept the argument that the section 
553 procedures were "unnecessary," since they found that "the com- 
pound rate would affect numerous jurisdictional gas companies and 
potentially involves large sums of money."^^^ The court also ex- 
pressly rejected the Commission's contention that the procedures 
were "unnecessary" because the new rule imposed no obligation on 
affected parties that could not have been imposed on them by ad hoc 
adjudicatory orders in each case. "The crucial fact is that the Com- 
mission elected to proceed in this case by making a general rule and, 
when engaged in rule-making, it must comply with the procedural 
requirements imposed on rule-making by the Administrative Proce- 
dure Act, which it failed to do . . . ."^^^ 

245. See text accompanying notes 212-16 supra. 

246. 412 F.2d 740 (1969). 

247. 412 F.2d at 743. 

248. 412 F.2d at 743. 

249. 412 F.2d at 745. 


By holding as it did, the court in Texaco seems to have taken the 
position that the ability of an agency to achieve the same result as 
a rule by another means, such as ad hoc adjudication, does not make 
the requirements of section 553(b)-(c) "unnecessary" when the 
agency in fact elects to achieve that result through rule-making. This 
Article is not the place to explore fully the wisdom of that result.^^" 
However, a number of general points are worth making here. The 
result in Texaco can be justified in light of the fact that the APA 
favors public participation in rule-making in all cases except those 
where very good reasons preclude it; the fact that the rule was not 
minor in its effects and had a large financial impact on many com- 
panies ;2^^ and the fact that the agency did make a conscious choice 
to proceed by rule-making which would result in an order of general 
applicability rather than by an ad hoc order in each case.^^^ On the 
other hand, one of the undesirable effects of this decision may be to 
discourage the use of general rules in favor of ad hoc adjudication, 
a result that is usually contrary to the sound administration of regu- 
latory policies.2''^ 

The "unnecessary" exemption should also not allow agencies to 
avoid section 553 procedures on the ground that a rule has only a 
small impact on a very limited segment of the public and is there- 
fore "minor" or "unimportant." It is wise to have well-informed 
decision-making and citizen participation in rule-making that has a 
relatively small impact on limited segments of the public, as well as 
in those actions that have a great impact on large portions of the 
public. The size of the group harmed is in no way related to the size 
or nature of the individual interest that may be worthy of the pro- 
tection accorded by a right of public participation. And the magni- 
tude of the harm inflicted on a class is, as a general proposition, not 
a reliable guarantee of the efficacy or usefulness of public participa- 
tion in improving the operation of government or in relieving un- 
usual individual pain. A small inconvenience to some may be large 
to others whose circumstances are different or peculiar. At any rate, 

250. Cf. NLRB v. Wyman-Gordon Co., 394 U.S. 759 (1969) (agenqr order issued to a 
party in the course of an adjudicatory proceeding valid and enforceable, even though 
the same requirement announced as a prospective rule in the course of an adjudication 
would be void because it failed to follow the rule-making requirements of section 553). 
See generally Comment, Wyman-Gordon and the Excelsior Rule, 117 U. Pa. L. Rev. 
621 (1969). 

251. 412 F.2d at 743 n.7. 

252. 412 F.2d at 744 n.9. 

253. See United States v. Storer Broadcasting Co., 351 U.S. 192, 203 (1956); NLRB 
V. Majestic Weaving Co., 355 F.2d 854, 860 (2d Cir. 1966). See also Auerbach, Should 
Administrative Agencies Perform Adjudicatory Functions?, 1959 Wis. L. Rev. 95; Sha- 
piro, The Choice of Rulemaking or Adjudication in the Development of Adminis- 
trative Policy, 78 Harv. L. Rev. 921 (1965). 


since several very minor inconveniences or impositions by govern- 
ment can add up to major ones, government should not be allowed 
to act insensitively toward the former. The "unnecessary" exemption 
should not, therefore, be a vehicle to avoid public participation 
merely because, as a general proposition, the injury worked on in- 
dividuals is estimated to be relatively small, or the number of per- 
sons involved is few.^^* Of course, some of the usual procedures can 
be avoided on other bases when the number of individuals affected 
by a proposed rule is very small. For instance, under section 553(b) 
notice of proposed rule-making need not be published if the persons 
"subject thereto are named and either personally served or otherwise 
have actual notice thereof." 

As noted, the term "unnecessary" as it now appears in section 
553(b)(B) probably means that usual procedures may be ignored 
only when they are of no value or help in light of the purposes for 
which public participation is desired. But with the aid of some cor- 
roborating legislative history, which could be supplied at the time 
section 553(a)(1) is altered or repealed, the term "unnecessary" could 
also provide an express statutory vehicle by which executive privilege 
may be invoked. This term could be deemed to mean that the usual 
procedures may be ignored when they are "useless" because they may 
not constitutionally be forced on the executive branch. As will be 
noted, there are types of "military or foreign affairs function" rule- 
making that may be beyond Congress' authority to regulate even 
on a purely procedural basis because they involve matters vested 
wholly and exclusively in the President by the Constitution. While 
the "unnecessary" exemption is not an essential tool for the invoca- 

254. Note the following illustration in this connection: 

One congressional office got a host of complaints from people, not only in that 
area, but throughout the country, on an unimportant rule which an agency had 
made without any public notice or hearing, related to public property. It related 
to how many pounds of pertrified wood you could take off the premises of a 
national reservation of some type. And this agency had thought — well, it is a 
terrible thing to lose all these hunks of stone, so they — within their own internal 
organization, they came up with one pound, or something like that. 

This provoked all this correspondence to Congress. 

So the congressional people involved went down to the agency . . . [which] 
said — "Oh, well, we realize we made a mistake, we will raise it to five pounds." 
So the congressmen went back and said we solved the problem. The agency said yes, 
very unimportant. 

Well, that provoked ten times more mail than came in the first time, because 
it turned out that five pounds just didn't qualify under the standards by which 
petrified wood is traded in the market of . . . collectors. ... It has to be a bigger 

Well, the moral of that particular story was that this supposedly minor rule . . . 
turned out to be important to a lot of people in this country, and the fact that 
the agency did not give public notice, and give the public a chance to express 
its opinion, caused a heck of a lot of trouble for an awful lot of people. 
Transcript, ABA Symposium on S. 1336, Washington, D.C.. Dec. 1, 1966, at 110-11. 


tion of executive immunity, it may be desirable to make it a vehicle 
for that purpose — even the exclusive vehicle, if that is constitutionally 
possible. The section 553(b)(B) procedural requirements of a formal 
finding that notice and public participation would be "impracticable, 
unnecessary, or contrary to the public interest," followed by publica- 
tion of the finding with the reasons therefor, would ensure careful 
consideration of the necessity and lawfulness of any claim of executive 
immunity before it is made, and thereby eliminate some legislative- 
executive conflict while increasing public participation in rule-mak- 
ing. It would also avoid misunderstandings because the fact of the 
immunity claim and its nature are made completely clear to all. 

Of course, an agency's determination on this issue would be 
subject to judicial review. There is certainly no nonjusticiable politi- 
cal question involved. The issue is only whether the agency was 
justified, as a matter of law, in determining that adherence to usual 
procedures was "unnecessary" because the rule-making in question 
is a product of exclusive presidential authority. Judicial review of a 
section 553(b)(B) "unnecessary" finding based on a claim of execu- 
tive privilege is different from the situation presented in Chicago & 
Southern Air Lines v. Waterman Steamship Corp.^^^ There, the 
United States Supreme Court held unreviewable the merits of an 
administrative determination that certain American air carriers 
should be accorded air routes to foreign countries. The Court did 
not refuse to define the exclusive competence of the executive 
branch. Rather, after defining it, the Court refused only to review 
an administrative determination that was inseparably linked to arl 
exercise of that exclusive competence. 

This situation is more like Powell v. McCormack,^^^ which deter- 
mined whether Congress had exceeded its constitutional authority 
when it sought to impose certain qualifications, other than those 
specifically enumerated in the Constitution, on the election of rep- 
resentatives. In reviewing a section 553(b)(B) finding that usual rule- 
making procedures are "unnecessary" because the "military or for- 
eign affairs function" policy involved is allegedly a product of ex- 
clusive presidential powers, the Court need do no more than it did 
in Powell. It need only determine whether or not the particular 
rule-making involved is in fact a product of exclusive executive 
authority under the Constitution, just as the Court in Powell deter- 
mined whether the additional qualifications imposed on representa- 

255. 333 U.S. 103 (1948). 

256. 395 U.S. 486 (1969). 


lives were in fact a product of exclusive congressional authority. 
Only the Court is in a position to resolve successfully a dispute of 
that sort between the other two coequal branches. 

The "impracticable" exemption could adequately deal with a 
number of different situations in which a requirement of advance 
notice of rule-making and public participation therein would be 
unreasonable. In emergency cases where a rule is needed imme- 
diately to avoid injury or frustration of a program's objectives, 
the usual procedures of section 553(b)-(c) can be disregarded because 
they are "impracticable." According to the Attorney General's 
Manual, for example, an agency may learn "that certain rules con- 
cerning . . . safety should be issued or amended without delay; with 
the safety of the . . . public at stake, the . . . [agency] could find that 
notice and public rule-making procedures would be 'impracticable,' 
and issue its rules immediately."^^'' 

The Department of Agriculture has properly stated that the 
same rationale is equally applicable when the Department must 
impose or modify animal or plant quarantines promptly to prevent 
the spread of diseases or insect pests; or when the Department makes 
orders under the Packers and Stockyards Act of 192 F°® to continue 
temporary rate schedules previously authorized after notice and an 
opportunity to be heard, if prompt action is necessary to avoid a 
reversion to rates and charges that are unrealistic in light of existing 
economic conditions; or when the Department finds under the 
Agricultural Adjustment Act of 1933^^® that last minute changes 
in acreage allotments and marketing quota regulations are necessary 
because farmers must know of such changes prior to planting.^^** 
To force adherence to the procedures of section 553 in any of these 
situations would be "impracticable" because time is of the essence. 

Consider also the situation presented in Durkin v. Edward S. 
Wagner Co.'^^^ In an earlier decision involving the same parties, 
the court had held that particular workers were not covered by 
certain regulations under the Fair Labor Standards Act.^^z This 

257. Attorney General's Manual, supra note 13, at 30-31. See also 1957 House 
Survey, supra note 39, pt. IIC (Independent Agencies — Interstate Commerce Com- 
mission), at 1760. 

258. 7 U.S.C. §§ 181-229 (1970). 

259. 7 U.S.C. §§ 601-23 (1970). 

260. 1957 House Survey, supra note 39, pt. 1 (Department of Agriculture), at 26-27. 
See also Dighton v. Coffman, 178 F. Supp. 114 (E.D. 111. 1959), affd., 279 F.2d 497 (7th Cir. 

261. 115 F. Supp. 118 (E.D.N.Y. 1953), affd. per curiam sub nom. Mitchell v. Edward 
S. Wagner Co., 217 F.2d 303 (2d Cir. 1954), cert, denied. 348 U.S. 964 (1955). 

262. 29 U.S.C. §§ 201-19 (1970). 


holding was contrary to the interpretation and practice of the Ad- 
ministrator of the Wage and Hour Division — an interpretation 
known and relied upon by the industry involved. As an immediate 
response to this decision, and without resort to usual rule-making 
procedures, the Administrator promulgated a rule that included 
those workers within the relevant regulations. When the new rule 
was issued, the Administrator stated that it would be "impracticable, 
unnecessary, or contrary to the public interest" to follow usual rule- 
making procedures in the making of this "clarifying" regulation: 

[I]mmediately effective clarification of the regulations is essential 
in order to accomplish the intent of the present regulations to safe- 
guard the wage standards in the industry, to eliminate the unfair 
competitive situation, and to provide for adequate enforcement of 
the home work restrictions.^^s 

On the basis of this evidence, and in the absence of any evidence to 
the contrary, the court held that the rule was properly treated as 
within the section 553(b)(B) exception.^^* 

The court's result seems justifiable because any delay in promul- 
gation of the rule would have encouraged employers to abandon 
their previous adherence to the Administrator's interpretation of 
the earlier rule until a new rule to the same effect was formally 
adopted. This would have hurt countless employees who had come 
to rely on the prior interpretation. It also would have injured those 
employers who chose, despite their competitors' contrary action, to 
keep their wages at the levels demanded by the earlier interpretation 
during the period in which the new rule was being adopted with 
public procedures. 

As noted earlier in this Article, there are many situations where 
agencies making rules involving "military or foreign affairs func- 
tions" must be able to act quickly to fulfill their mission properly.^^s 
In those cases where usual rule-making procedures would unduly 
hinder this necessary capacity for speed they are, of course, "im- 

263. 115 F. Supp. at 122. 

264. 115 F. Supp. at 122-23. On appeal, the court said: 

Judge Galston has found that the defendant's operations fall within the 
amended regulations and that the regulations were properly promulgated under 
the Administrative Procedure Act .... We see no reason to overturn his well- 
reasoned conclusions. While there was no advance notice of the amendment, 
yet that was not necessary, both because of its nature as an "interpretive" rule and 
because of the Administrator's finding of "good cause" for immediate action, based 
upon the fact that other employers in general were complying with this inter- 
pretation of the Act and defendant had long known of the view held by the 
217 F.2d at 304. 

265. See text accompanying notes 204-06 supra. 


practicable" within the meaning of section 553(b)(B). Agencies mak- 
ing subsection (a)(1) rules may, as a result, avoid usual procedures 
in such cases by resort to this limited exemption. Proper reliance on 
the "impracticable" exemption because of a special need for speedy 
agency action is likely to be more frequent in cases involving 
"military or foreign affairs functions" rule-making than in cases 
involving other types of rule-making. The peculiar nature of 
"military and foreign affairs" dictates this conclusion. On the basis 
of a need for speed alone, for example, much strategic military and 
foreign policy formulation will be exempt from usual procedures 
under section 553(b)(B). 

Either the "impracticable" or "contrary to the public interest" 
exemption, or both, must be deemed to exempt rule-making from 
usual procedures when adherence to these procedures would cause 
the very evil that the rule seeks to avoid or would sabotage the rule's 
effectiveness. An agency can ignore usual rule-making procedures 
under section 55 3(b) (B) whenever advance notice would tend to 
defeat a rule's purpose, because in such situations those procedures 
would certainly be "contrary to the public interest.''^^^ in practice, 
usual rule-making procedures have been deemed "impracticable" 
or "contrary to the public interest" when, for instance, there is 
"danger that certain companies might take advantage of the interim 
period to effect transactions which the rule is designed to prevent 
or control and thus escape the intended regulation of conduct 
altogether."^^'^ Normal procedures have also been deemed avoidable 
on those bases in cases where they would "permit speculators or 
others to reap unfair profits or to interfere with the [agency's] 
action taken. "^^^ A proposed revision of section 553 contained a 
specific exemption for "matters with respect to which notice of 
proposed rulemaking would seriously impair effectiveness of a 
rule."^^* There seems little doubt, however, that the function sought 
to be performed by that proposed revision is adequately performed 
by the existing "contrary to the public interest" terminology. 

Other situations that may involve section 553(a)(1) rule-making 
illustrate how the "contrary to the public interest" exemption would 

266. See 1941 Hearings, supra note 20, at 812. See also Attorney General's 
Manual, supra note 13, at 31. 

267. B. Schwartz, An Introduction to American Administrative Law 62 (1958) 
(Securities and Exchange Commission). 

268. 12 C.F.R. § 262.2(e) (1972). See also S. 518 Hearings, supra note 127, at 367 
(Federal Reserve Board). 

269. S. 2771. 90th Cong.. 1st Sess. § 553(h)(6) (1967). 


properly release an agency from following usual procedures. The 
Department of Commerce has reported, for example: 

In the exercise of priority and allocation functions [under the De- 
fense Production Act of 1950] speed in the issuance of orders and 
regulations is often essential as prior notice of proposed govern- 
mental action would tend to defeat the purpose intended to be ac- 
complished thereby. For example, notice of intention to place 
certain materials under production control or to limit acquisition 
thereof might create panic buying in an effort to get the jump on 
the regulation and on competitors.^'^® 

In such cases the Bureau of Defense Services Administration has 
concluded that the section 553(b)(B) exemption may properly be 
invoked on the grounds that adherence to usual procedures would 
be "contrary to the public interest.''^^! In the same vein, adherence 
to usual procedures may be dispensed with as "impracticable" or 
"contrary to the public interest" when import controls are imposed 
on textiles, or embargoes are imposed by the Department of Trea- 
sury's Office of Foreign Assets Control. In the first of these cases 
arguably involving "foreign affairs function" rule-making — the tex- 
tile program — compliance with the advance notice requirements 
could stimulate exports to the United States of the very goods that 
might later be subject to import limitations, thereby causing some 
of the evil sought to be prevented. And "if it were publicly known 
that the United States was definitely going to impose a financial 
embargo on a particular country at a certain time there would, 
within a matter of several hours, be a virtually complete transfer 
of all its public and private liquid assets to other countries. Obviously, 

therefore, public hearings would nullify the proposed embargo en- 

On this basis it is also "impracticable" or "contrary to the public 
interest" to follow usual rule-making procedure in the making of 
most, if not all, strategic military policy and strategic foreign policy. 
Even if the strategic policy involved need not be kept secret after it 
is implemented, utilization of usual rule-making procedures in its 
formulation will usually be disastrous because they will reveal the 
intended scope of such policy in advance of its actual implemen- 
tation. If the "other side" is aware of the contemplated policy of this 

270. 1957 House Survey, supra note 39, pt. 2 (Department of Commerce), at 115 
(in reference to its functions under the Defense Production Act of 1950, 50 U.S.C. App. 
§§ 2061-168 (1970)). 

271. Id. 

272. 1969 Survey Response (Department of the Treasury). See text accompanying 
notes 207-08 supra. 


country before that policy is actually put into effect in concrete 
public action, the very purposes sought to be accomplished may be 
defeated, the evils sought to be avoided may be caused, or the "other 
side" may be enabled to evade the effects of that strategy. Conse- 
quently, adherence to normal procedures in these cases is "imprac- 
ticable" or "contrary to the public interest" within the meaning of 
section 553 (b)(B).273 

There is also no reason why the "contrary to the public interest" 
language of section 553(b)(B) cannot serve as a satisfactory means 
for accommodating the need for public rule-making procedures on 
the one hand, and the need for inexpensive, expeditious, effective, 
and efficient government administration on the other. The function 
performed by exemptive language such as "occasion delay or expense 
disproportionate to the public interest," which appeared in a bill 
introduced several years ago in an effort to revise completely the 
rule-making provision,^^^ can easily be performed under section 
553(b)(B) by balancing the relevant considerations under the stan- 
dard "contrary to the public interest." 

It has been suggested that the "contrary to the public interest" 
terminology should allow the Department of Labor an exemption 
for the wage determinations it makes under the Davis-Bacon^^^ and 
related acts because of the especially large number of such "rules" 
that the Department must continually make during a limited 
period.2''8 The factual basis for this conclusion is set forth in the 
following passage: 

[T]he Davis-Bacon Act and some 45 related acts for Federal and 
Federally assisted construction contracts . . . provide that the specifi- 
cations for all such contracts shall require the contractor to pay to 
his laborers and mechanics at least the prevailing wage as determined 
by the Secretary of Labor. The determinations are made by the 
Secretary at the request of the contracting agency before the bids are 

Application of the formal rule-making requirements of section 
[553] would require some 500 to 600 notices of proposed rulemaking 
to be published each week in the Federal Register. Interested per- 

273. Of course, as noted earlier, reliance on an executive order under section 
552(b)(1) may satisfy the need for an exemption in this situation as well. 

274. See S. 2335, 88th Cong., 2d Sess. § 1003(f) (1964). This bill would have com- 
pletely revised the rule-making section of the APA. 

275. 40 U.S.C. §§ 276a to a-5 (1970). See also, e.g., 41 U.S.C. §§ 35-45 (1970). 

276. Participants in the deliberations of the Administrative Conference of the 
United States at the time Recommendation No. 16 was being considered expressly 
articulated this view on a number of different occasions and relied thereon in adopting 
the Recommendation. 


sons would have an opportunity ... [to participate in each case]. The 
processing of the submitted data, views, and arguments could result 
in obvious delays and additional personnel and other costs.^'^ 

In this program, the magnitude of the adverse consequences that 
would result from an application of standard rule-making procedures 
to the particular determinations involved were deemed to outweigh 
any positive good that might result from requiring adherence to 
normal procedures. An exemption from usual requirements should, 
therefore, be allowed in this situation under the "contrary to the 
public interest" language. In many other situations the facts may 
dictate the same result with respect to the determination of contract 
specifications, if they are "rules." 

Similarly, rules affecting the public that are promulgated on a 
day-to-day basis for individual military bases by the commander 
of each base, may also properly be exempted from usual procedures 
because of their sheer volume. There are hundreds of armed forces 
bases at home and abroad, and every year the commander of each 
of these bases makes scores of rules affecting the public that are 
tailored to the peculiar needs and circumstances of his base or the 
military property under his control. ^^^ Rules regarding public access 
to the base and use of its facilities are examples. Given the huge 
number of such rules in aggregate that may be promulgated by all 
base commanders every year, a Davis-Bacon Act argument might be 
equally applicable: It may be "contrary to the public interest" to 
require adherence to normal procedures for rules promulgated by 
individual base commanders for their particular bases, as distin- 
guished from rules promulgated by the Department of the Army 
for all Army bases generally. Even though it may not be "contrary 
to the public interest" to force adherence to normal procedures for 
each such base rule considered separately, running the aggregate 
of all such rules through that procedure may be so burdensome, time- 
consuming, and expensive that it is unjustifiable in light of the 
potential benefits. A class finding with respect to rules of this par- 
ticular type may, therefore, be made on the basis of their huge and 
unmanageable number, just as it may be done in the Davis-Bacon 
Act situation. But the class must be narrowly drawn to satisfy section 
553(b)(B) and the volume of rules involved must in fact be as large 
as here supposed — a point that requires empirical verification. 

The same argument can be made with respect to all everyday 

277. S. 518 Hearings, supra note 127, at 239-40. 

278. See Department of the Army, Military Reservations, ch. X (Pamphlet 27-164, 
Oct. 1965). 


command orders issued by one member of the armed forces to 
another, if they are rules within the APA definition.^''^ Uncounted 
millions of such orders are issued every year directing the manner 
in which ordinary military duties are to be performed. A narrowly 
tailored finding that rule-making in this category should be exempt 
under the "contrary to the public interest" language of section 
553(b)(B) would, therefore, also be fully justified on a volume basis 
alone. In most situations, resort to usual procedures for such rule- 
making would also be "impracticable" or "unnecesary" on other 
bases. However, as will be seen, most if not all of the orders of this 
character are exempt from usual procedures anyway under existing 
exemptions other than section 553(b)(B). They may be exempt, for 
example, as either "general statements of policy" or as rules relating 
to "agency management or personnel. "^^^ 

Similarly, the "contrary to the public interest" standard found 
in section 553(b)(B) should permit exemptions for other extra- 
ordinary situations. Those extraordinary situations will usually (but 
not always) arise in contexts where the volume of rule-making deci- 
sions that must be made is exceptionally large. Where the delay and 
costs involved are of such a magnitude, due to special facts of the case, 
that they outweigh the strong public interests favoring adherence to 
usual rule-making procedures, an exception could be allowed. More 
than just "any" increase in cost or delay will be necessary to justify 
such an exception under this standard. The facts will have to demon- 
strate that an atypically large delay or increase in cost will result 
from adherence to normal rule-making procedures, and that the 
extraordinary delay or cost is not outweighed by the benefits of ad- 
herence to those usual procedures. Situations of this sort will be 
relatively few. The ordinary costs and delays occasioned by giving 
notice and an opportunity for public participation are properly 
treated by the Act as an acceptable quid pro quo for the important 
benefits achieved. 

Section 553(d)(3) should perform the same function for section 
553(d) as section 553(b)(B) performs for section 553(b)-(c). Accord- 
ing to section 553(d)(3), an agency can dispense with the section 

279. See 5 U.S.C. §§ 551(1), 551(4) (1970). The question is whether all commands 
by a military superior to a subordinate are "agency" statements "designed to implement, 
interpret, or prescribe law or policy." An "agency" is defined as "each authority of 
the Government of the United States whether or not it is within or subject to review 
by another agency." Since each superior may be deemed an "authority of the Govern- 
ment of the United States" their orders may constitute "rules." But see text accom- 
panying notes 4-6 supra. 

280. See 5 U.S.C. §§ 553(a)(2), 553(b)(A) (1970). 


553(d) requirement of publication or service of a substantive rule 
at least thirty days before its effective date whenever the agency 
decides to do so "for good cause found and published with the rule." 
This "good cause" exemption should give agencies at least as much 
discretion to avoid the application of section 553(d) in appropriate 
cases as the "impracticable, unnecesary, or contrary to the public 
interest" exemption gives them to avoid the application of section 
553(b)-(c). Indeed, the former may give agencies even more dis- 
cretion than the latter because the guiding terms "impracticable, 
unnecessary, or contrary to the public interest" are conspicuously 
absent from section 553(d)(3). 

Nevertheless, to make the requirements of section 553(d) mean- 
ingful, the exemption from its terms should be construed to be as 
broad as, but no broader than, section 553(b)(B). If that is so, the 
"good cause" required by section 553(d)(3) must also be predicated 
on a finding that adherence to usual procedures is "impracticable, 
unnecessary, or contrary to the public interest." The legislative 
history of the "good cause" exception in section 553(d)(3) supports 
the conclusion that the two exemptions should be treated as con- 
gruent. The House Report on the APA states: 

[This] exception — upon good cause found and published — is not an 
"escape clause" which may be exercised at will but requires legiti- 
mate grounds supported in law and fact by the required finding. 
Many rules . . . may be made operative in less than 30 days because 
of inescapable or unavoidable limitations of time, because of the 
demonstrable urgency of the conditions they are designed to cor- 
rect, and because the parties subject to them may during the usually 
protracted hearing and decision procedures anticipate the regula- 

Previous discussion should demonstrate that if the section 
553(a)(1) exemptions were eliminated, the exclusions found in 
section 553(b)(B) and section 553(d)(3) could adequately handle any 
peculiar problems that would arise in rule-making involving military 
or foreign affairs functions. Where a rational balancing of the rele- 
vant interests would indicate the desirability of an exception from 
the requirements imposed by section 553(b)-(d) for particular rule- 
making, the above "good cause" exemptions could suffice to achieve 
the result. 

No special exemption is needed from the right-to-petition pro- 
vision of section 553(e) if the subsection (a)(1) exclusions are re- 

281. Legislative History, supra note 13, at 260. See id. at 201. See also Buckeye 
Cablevision, Inc. v. FTC, 387 F.2d 220, 228 n.34 (D.C. Cir, 1967). 


pealed. Interested parties should always have the right to petition 
for the issuance, amendment, or repeal of a rule. As noted earlier, 
the only obligations that this right imposes on an agency are the 
duty to follow its own rules with respect to such petitions, and the 
section 555(e) duty to respond by giving "[pjrompt notice ... of the 
denial in whole or in part of a . . . petition accompanied by a brief 
statement of the grounds for denial." If the need arises, an agency 
may treat a group of similar petitions as an entity and issue a single 
response. Consequently, except for one situation to be noted later, 
there seems to be no case relating to section 553(a)(1) rule-making in 
which even a qualified exemption from section 553(e) is required. 
Currently no exemption from the right-to-petition requirement is 
deemed necessary for any rule-making already subject to the terms 
of section 553. In light of the importance of that right, and the 
minor burden it imposes on agencies, this position seems fully justi- 

If the right to petition continues unhampered by any exceptions 
even after the subsection (a)(1) exemptions are removed, an im- 
portant salutary consequence will follow. In every case where usual 
public procedures are dispensed with prior to the promulgation of a 
rule, because the qualified exemptions of section 553(b)(B) are ap- 
plicable, interested parties will have an effective opportunity to 
express their views on that rule subsequent to its enactment. They 
can file a petition for the amendment, repeal, or modification of the 
rule in question, including a statement of their reasons therefor. 
The agency will then be obliged to respond, as section 555(e) re- 
quires, with "[pjrompt notice ... of the denial in whole or in part 
of [the] petition . . . accompanied by a brief statement of the grounds 
for denial." A statement of grounds is not required, of course, if the 
agency merely reaffirms a prior denial, or the denial is self-explana- 

The section 553(b)(B) and section 553(d)(3) exemptions impose 
a special obligation of disclosure on agencies utilizing those pro- 
visions. An agency must incorporate in the rules issued without 
following usual procedures the necessary statement of "good cause," 
predicated upon a finding that adherence to section 553(b)-(d) is 
"impracticable, unnecessary, or contrary to the public interest," and 
must also include a brief statement of the reasons for that finding. 
In cases where the exemption utilized is based on a finding with 
respect to a whole class of cases, only one such full publication ap- 
plicable to the whole class should be required. Rules in that class 
subsequently issued without resort to usual procedures would only 


need to refer to the prior full publication of findings and reasons 
and to give its citation. To be of value, the reasons listed in the rules 
as justification for the failure to follow usual procedures must, of 
course, be fairly specific. Declarations in the language of the Act will 
not satisfy this requirement and should be inadequate under the 
statute. As noted by the Administrative Conference, "[E]ach finding 
of this type , . . should include a statement of underlying reasons 
rather than a mere conclusory recital."282 At the same time, the 
required statement of reasons need not be so detailed that it is 
unduly onerous. 

This disclosure obligation will have two salutary effects. First, 
such a requirement will force the agency to consider carefully its 
reasons for each claim to an exemption. Second, by requiring an 
official statement of the agency's reasons for using the exemption, 
judicial review of that decision will be facilitated. If the decision is 
challenged in a judicial proceeding, the court can test its validity 
against the reasons provided in the prior publication. The require- 
ment that agencies formally and publicly state the reasons for their 
conduct should, therefore, keep them both thoughtful and honest 
in their use of the exemption. 

In this connection a further point deserves some elaboration and 
explanation. Publication of the specific reasons for avoiding usual 
procedures is required by sections 553(b)(B) and 553(d)(3). Com- 
munication of the denial and the specific reasons for the denial of a 
petition is required by sections 553(e) and 555(e). But mere per- 
formance of those statutorily imposed obligations may cause serious 
evils in some cases involving "military or foreign affairs function" 
rule-making. However, this does not demonstrate that sections 
553(b)(B) and 553(d)(3) cannot adequately handle all of the problems 
that would arise if, without more, section 553(a)(1) were simply 
eliminated. As noted earlier, an agency need not violate a proper 
executive order commanding certain specific matters to be kept 
secret in the interest of "national defense or foreign policy" in order 
to satisfy any requirements of section 553. Of course, this includes 
the requirements of sections 553(b)(B) and 553(d)(3) and sections 
553(e) and 555(e). No other result seems possible when section 
552(b)(1) is read in conjunction with section 553. If the President 
really believes that the publication of reasons required by section 
553(b)(B), for example, would be harmful to our "national defense 
or foreign policy" in situations involving certain matters, he can 

282. Recommendation No. 16, supra note 8. 


always order that these reasons be kept secret under section 552(b)(1). 
In these cases compliance with those provisions requiring publication 
or communication of reasons is excused as a matter of law, without 
affecting the validity of the rules ultimately issued. 

On the other hand, if the President does not issue such an order 
applicable to the particular matter in question, and the matter is 
not otherwise exempt from the requirements of section 552, the 
agency should not be able to invoke the need for secrecy as an excuse 
for noncompliance with the statement-of-reasons requirements of 
these provisions. After all, to the extent that the reasons for the 
agency's failure to follow usual procedures, or its reasons for turning 
down a petition, appear anywhere in the government's files, they 
may be inspected by members of the public unless they are somehow 
exempt from public perusal under section 552. So, if the public has 
the right to inspect documents relevant to the rules in question 
under section 552, agencies may not properly claim the need for 
secrecy as an excuse for not complying with the statement-of-reasons 
requirements of sections 553(b)(B) and 553(d)(3) and sections 553(e) 
and 555(e). 

The 1969 survey^^^ asked all federal agencies the following 

Why are the several specific exemptions currently contained in 
§ 553(b)-(e) insufficient to deal with any disadvantages that might be 
encountered by your department or agency if all of § 553(a)(l)-(2) 
was repealed? Among these specific exemptions just referred to is 
that contained in § 553(b)(B) providing that public notice of rule- 
making is not required "when the agency for good cause finds (and 
incorporates the finding and a brief statement of reasons therefor in 
the rules issued) that notice and public procedure thereon are im- 
practicable, unnecessary, or contrary to the public interest." 

Agencies making rules presently exempted by subsection (a)(1) from 
section 553 responded in various ways to this question. These re- 
sponses, and the following discussion of section 553(b)(B), may also 
be considered applicable to the section 553(d)(3) exemption since, as 
noted, the requirements of that exemption are probably congruent 
with those of section 553(b)(B). 

Some respondents insisted that the section 553(b)(B) exemption 
was an insufficient substitute for subsection (a)(1) simply because 
the latter exemption is necessary as it is, and the former is not as 
broad as the latter.^^* Responses of this sort are of little help in 

283. See text accompanying note 38 supra. 

284. 1969 Survey Response (Atomic Energy Commission, Post Office Department, 
Department of the Navy). For example, the Post OfEice stated: 


evaluating the impact that the proposed statutory change may have, 
and they in no way detract from the solution previously suggested. 
They amount to no more than unexplained assertions. 

Another objection to section 553(b)(B) as a substitute for section 
553(a)(1) is that making the findings required by the former would 
constitute too great an administrative burden on the agencies.^^^ The 
Department of Defense stated that 

[ajdmittedly, the exemption is a broad one in which [the Depart- 
ment] would rely in issuance of any highly significant rule. . . . But 
the scope and volume of substantive rulemaking in the Department 
makes impracticable compliance with the unwieldy requirement 
for a "finding and brief statement of reasons" for the "good cause."286 

By way of summary, the Department of Defense has noted that "the 
primary disadvantages" of any reliance on section 553(b)(B) as a 
substitute for section 553(a)(1) — which it prefers — "can be described 
as costly administrative delay and excessive paperwork without ap- 
parent compensatory benefit to the public. "^^^ 

Since the statement of findings and reasons is required only in 
those cases in which the agency opts out of the usual procedures, 
and it can be made for a whole class of rule-making in the few 
instances where that can be justified on the basis of the special facts 
and circumstances discussed previously, this objection seems un- 
sound. The burden involved here is merely that the agency must set 
down a finding that public procedures are "impracticable, unneces- 
sary, or contrary to the public interest," and a brief statement of the 
reasons supporting this conclusion. ^^^ To some extent agencies 

It is considered that the specific exemptions contained in Sec. 553(b)-(e) are 
not well adapted to serve as substitutes for the subject area exemptions. It is 
believed that the exemption stated in Sec. 553(a) reflects a proper and generalized 
finding that the provisions of Sec. 553(b)-(e) are not appropriate for rulemaking 
in these subject matter areas and that the reasons underlying this will continue 
despite repeal of Sec. 553(a). 
And the Department of the Navy stated: 

It is apparent, then, that the coverage of the exemptions in subsection (b) [of 
section 553] can be very broad. Beyond this observation, the Judge Advocate 
General is unable to conclude that the Department would not be disadvantaged 
by the elimination of the privilege exemptions in subsection (a). 

285. 1969 Survey Response (Department of Defense). See also S. 1663 Hearings, 
supra note 104, at 307: "[T]he necessity of determining for each such function whether 
public participation is unwarranted or contrary to the public interest would itself prove 

286. 1969 Survey Response. 

287. 1969 Survey Response. 

288. Thus, the argument of the Department of the Treasury's OflBce of Foreign 
Assets Control to the effect that section 553(b)(B) is an inadequate substitute for 
subsection (a)(1) because its rules "are of an urgent nature with a minimum of time 


should be doing that in any case — if they are in fact living up to 
their more general responsibilities to accord as much participation 
in rule-making as possible, consistent with their other obligations. 
The burden, therefore, seems to be both of a kind and quantity that 
the agencies should be willing and able to bear in light of the at- 
tendant benefits. 

Another reason has been suggested as to why the current ex- 
emptions contained in section 553(b)(B) are inadequate substitutes 
for the subject exemptions of section 553(a)(1). It is said that the 
scope of section 553(b)(B) is unclear and uncertain. Reliance upon 
that exemption, therefore, would not clearly handle all the problems 
created by a repeal of section 553(a)(1); and it would probably 
result in much litigation over the scope of the subsection (b)(B) 
exemption, causing undue delay in the execution of agency programs 
and the like. This "[ujncertainty about the scope of the exemption" 
and the fact that "such a finding [as is required by section 553(b)(B)] 
is subject to challenge in the courts making uncertain the validity 
of any rule issued under this exemption" were specifically noted by 
the Department of Defense.^^^ 

It is true that the terms "good cause" and "impracticable, un- 
necessary, or contrary to the public interest" may not be as precise 
as those which categorically exempt all rule-making involving 
"military or foreign affairs functions." While the scope of the latter 
terms may be vague, the former terms may be more difficult to apply 
to a given situation, since they demand resort to a balancing process 
that requires special assessment of the facts in each case. Conse- 
quently, on a comparative basis the application of section 553(b)(B) 
may not be as easy or clear as that of section 553(a)(1). 

Nevertheless, as previously noted, the language of section 
553(b)(B) can adequately deal with all of the problems created by a 
repeal of section 553(a)(1). That language also need not be as un- 
clear as the opponents of change in this area suggest. If section 
553(a)(1) is repealed. Congress could insert in the legislative record 
a statement that would clarify any ambiguities in the scope of section 

available for preparation of the necessary documents for publication" is specious. 1969 
Survey Response. 

289. 1969 Survey Response. See also 1969 Survey Response of the Department of Com- 
merce. The response of the Headquarters, Defense Supply Agency, was that 

the indefiniteness of the terms of section 553(b)(A) would make it difficult to 
determine whether a particular regulation fell within these exceptions and would 
lead to inconsistent application of the act. It is also probable that the courts would 
take jurisdiction to review any challenged determination of an exemption made 
under section 553(b)(B). This, of course, could have a serious adverse effect on 
defense operations. 


553(b)(B) along the lines described earlier. Moreover, litigation 
with respect to the scope and proper applicability of "good cause" 
and "impracticable, unnecessary, or contrary to the public interest" 
is not apt to be any more endless or obstructive here than it is else- 
where. And litigation is not in fact likely, in the overwhelming 
number of cases, to have any significant impact on the agencies' 
ability to perform their functions properly. Stare decisis should have 
a substantial effect within a brief time. Also, although wise and 
honest use of the section 553(b)(B) exemption by the relevant 
agencies will not forestall all litigation, it will forestall some. 

In the end, however, it must be admitted that there remains a 
real difference in clarity between section 553(a)(1) and section 
553(b)(B), and that some delays may be caused by litigation over 
the scope of the latter. But this consequence is a price worth paying 
for the largely increased breadth of the guarantee of public par- 
ticipation in the particular rule-making involved. After all, no 
showing has been made that such delays will have any serious ill 
effects in the few cases where there is some genuine doubt about 
whether the section 553(b) (B) exemption does in fact apply. If the 
fear really is that agencies will have to be careful in utilizing this 
qualified exemption and that their hands will be tied by it to some 
extent, this fear is justified. Similarly, if the fear is that in close cases, 
the unclear scope of this exemption will cause agencies to utilize 
normal rule-making procedures rather than risk possible litigation 
resulting in invalidation of the rule, that too is warranted.^^" Both 
of these results, however, are acceptable in light of the importance of 
the policy favoring public participation in rule-making. 

C. The "General Statements of Policy" and 
"Interpretative Rules" Exemptions 

Two other exemptions from section 553(b)-(d) deserve brief 
examination at this point. They have been recently analyzed and 
found to be justifiable.^^^ Their continued availability may be 
coupled with the availability of sections 553(b)(B) and 553(d)(3) to 
illustrate further the point that repeal of the section 553(a)(1) 
exemptions would not be unduly disruptive. According to sections 

290. Although not included in this study because it does not make rules involving 
"military or foreign affairs functions," the Department of Agriculture's Farmers Home 
Administration feared that repeal of section 553(a)(l)-(2), with consequent reliance 
solely upon the section 553(b)(B) exemption, might discourage issuance of rules and 
needed changes in rules. See 1969 Survey Response. This consequence seems highly 

291. See Bonfield, supra note 31. 


553(b)(A) and 553(d)(2), "general statements of policy" and "inter- 
pretative rules" are also exempted as a class from all procedural 
requirements of section 553(b)-(d). If the exemption for rules in- 
volving "military or foreign affairs functions" were repealed, there- 
fore, agencies could also rely on these exemptions for a goodly 
portion of their rule-making.^^^ 

In addition to being excludable from usual rule-making pro- 
cedures under the narrowly tailored exemptions of sections 55 3(b) (B) 
and 553(d)(3), therefore, much strategic military and foreign policy 
formulation, if they be "rule-making," may be excluded from the 
procedures of subsections (b)-(d) as "general statements of policy." 
Admittedly, the term "general statements of policy" is hard to define. 
It has been suggested, however, that 

"general statements of policy" may be rules directed primarily at the 
staff of an agency describing how it will conduct agency discretionary 
functions, while other rules are directed primarily at the public [or 
some segment thereof] in an effort to impose [legally enforceable] 
obligations on it. On this basis statements of policy are said not to 
have the effect of law; they do not alter [the legal rights of members 
of the public] . . . while other regulations do have that effect.293 

The determination as to what our nation's diplomatic policy shall 
be toward a certain foreign country would seem to be an example of 
that sort of "rule-making." So, too, many determinations regarding 
the everyday operations and deployment of the armed forces may be 
of this type, if they are "rules." 

D. The "Agency Management or Personnel" Exemption 

It should be stressed that even after section 553(a)(1) is repealed, 
agencies may still resort to the subsection (a)(2) exemption from 
every provision of section 553 for rule-making involving "a matter 
relating to agency management or personnel." As a consequence, 
the latter provision will be an additional means by which to avoid 
usual procedures for some rule-making involving "military or foreign 
affairs functions." A brief excursion into the potential scope of this 
exemption will demonstrate that the peculiar nature of the func- 
tions, operations, and structure of the military establishment results 

292. The section 553(b)(A) exemption from section 553(b)-(c) for "rules of agency 
organization, procedure, or practice" might also be mentioned here to make the same 
point. There is, however, great doubt whether this exemption is as worthy of con- 
tinuance as the other existing exemptions discussed in this Article. 

293. Bonfield, supra note 31, at 115. On statements of policy generally, see id. at 


in a larger proportion of its rules being exempted under the "agency 
management or personnel" provision than are exempted in the case 
of most other agencies. Obviously, the reasons for this are the un- 
usually large number of Defense Department personnel, which in- 
cludes all the personnel of the Army, Navy, and Air Force, and the 
fact that a very high proportion of the military's efforts is directed 
at managing, on a day-to-day basis, this unusually large staff. 

"Management" means, according to Webster's, "the conducting 
or supervising of something (as a business); esp: the executive func- 
tion of planning, organizing, coordinating, directing, controlling, 
and supervising any industrial or business project or activity with 
responsibility for results."^''^ "Personnel" means "a body of employees 
that is a factor in business administration esp. with respect to ef- 
ficiency, selection, training, service, and health: the division of an 
organization concerned primarily with the selection, placement, and 
training of employees and their representatives."295 

Presumably, "matter[s] relating to agency management or per- 
sonnel" are distinguishable from "rules of agency organization, pro- 
cedure or practice" since the former are exempted from all the 
provisions of section 553 by subsection (a)(2), while the latter are 
only exempted from subsections (b)-(c) by subsection (a)(A). "Mat- 
ter[s] relating to agency management or personnel" are also presum- 
ably distinguishable from "matters relating to public property, loans, 
grants, benefits or contracts." The latter are specially exempted 
from section 553 in a subsequent portion of the same subsection as 
that exempting "agency management or personnel." 

Obviously, the section 553(a)(2) exemption for "a matter relating 
to agency management or personnel" must at least be as broad as the 
analogous exemption for "any matter relating solely to the internal 
management of an agency" found in section 3 of the original APA, 
and the current exemption for matters "related solely to the internal 
personnel rules and practices of any agency" found in the newly re- 
vised freedom-of-information provision.^^^ It would be absurd to de- 
mand advance notice of, and a right to participate in, any rule-making 
expressly exempted from the requirements of public disclosure by a 
provision of the freedom-of-information section.^^^ On the other hand, 

294. Webster's, supra note 55, at 1372. 

295. Id. at 1687. 

296. 5 U.S.C. § 552(b)(2) (1970). 

297. In other words, the Act does not make it clear that all regulations that 
are exempted from the requirement of being published in the Federal Register 
[by the § 3 exemption for "any matter relating solely to the internal management 
of an agency"] are necessarily also exempted from the quasi-notice and hearing 


some rule-making subject to public disclosure requirements under 
section 3 of the original APA, or current section 552, might 
have been exempted from the advance notice and public participa- 
tion requirements of the rule-making provision without causing log- 
ical or practical difficulties. 

Note that the original APA freedom-of-information provision ex- 
empted only matters "relating solely to the internal management of 
an agency" while exemptions from the rule-making provision are 
granted "to the extent there is involved a matter relating to agency 
management or personnel." The language of the rule-making exemp- 
tion seems to be broader than that employed in the original freedom- 
of-information provision. "[SJolely . . . internal management of an 
agency" seems to be narrower than simply "agency management or 
personnel." Nevertheless, the scope of the rule-making and original 
freedom-of-information exemptions have been considered identical, 
despite the fact that their disparate wording could make a substantial 
difference in particular cases.^^* The reason for this is that the 
legislative history of the APA rule-making section indicates that the 
"exception of matters of management or personnel would operate 
only so far as not inconsistent with other provisions of the [APA] 
relating to internal management or personnel. "^^^ On that basis. 
Attorney General Tom Clark apparently believed that the exemption 
in section 553(a)(2) was congruent with the analogous exemption for 
"any matter relating solely to the internal management of an agency," 
found in the original public information provision of the APA.^**** 

Seaboard World Airlines, Inc. v. Gronouski^^^ is relevant here. The 
Post Office had promulgated a rule directed at its employees which 
provided that all mail would be "routed abroad by the most expedi- 
tious air service, without regard to the type of aircraft used."^"^ 
Plaintiff air carrier sought to enjoin the Post Office from operating 

requirement of § 4. Yet this is the only possible construction. For if a matter is 
either (because of its confidential nature) to be kept secret from or (because of its 
purely internal character) not sufiBciently important to the general public, so 
that not even the regulation itself need be made known, then a fortiori the public 
has no right to be notified of a merely proposed regulation. Thus § 4 does not 
apply where § 3 does not lie. 

R. Parker, supra note 225, at 178. This argument is obviously as true under the new 
public information act provisions as under those of the original APA. 

298. Id. at 179 n.40; Attorney General's Manual, supra note 13, at 27. 

299. Legislative History, supra note 13, at 199, 257. 

300. "The exemption [in section 4] for matters relating to 'agency management 
or personnel' is self-explanatory and has been considered in the discussion of internal 
management under Section 3." Attorney General's Manual, supra note 13, at 27. 

301. 230 F. Supp. 44 (D.D.C. 1964). 

302. 230 F. Supp. at 45. 


under the new rule on the grounds that no official notice of the pro- 
posed rule was published in the Federal Register, and plaintiff was 
not given an opportunity to submit written data, views, or arguments 
prior to the rule's promulgation. The Post Office Department argued 
that these procedures were unnecessary in this case because the rule- 
making involved was exempted from the requirements of section 553 
by the subsection (a)(2) exclusion for "agency management or per- 
sonnel." In finding that the new policy was a rule, and that its pro- 
mulgation did not fall within this exception, the court stated: 

The Government contends that the second exception is applicable 
in the instant case, that this new rule concerns the duties of the 
Post Office personnel. It is true that the Administrative Procedure 
Act does except any matter relating solely to the internal manage- 
ment of an agency. However, the policy involved here, although it 
is directed to the Post Office personnel, substantially affects outside 
parties and is therefore NOT subject to the exception.^**' 

This case seems to suggest that a rule specifying the duties of an 
agency's staff is not exempted by the exemption for "agency manage- 
ment or personnel" if it "substantially affects outside parties." The 
Gronouski result seems entirely appropriate under the language of 
section 3 of the original APA to the effect that any matter "relating 
solely to the internal management of an agency" was exempted. It 
also seems entirely appropriate as a matter of policy. But it is not 
necessarily consistent with the actual language used in section 553 
(a)(2) which speaks only of "a matter relating to agency management 
or personnel." If the two provisions were in fact meant to be con- 
gruent, however, the result is perfectly understandable. Some agen- 
cies, at least, seem to agree with that notion. One stated that "agency 
management and personnel are matters solely the concern of an 
agency itself, and do not affect members of the public to any appre- 
ciable extent. "^''^ 

Thus, "military and foreign affairs function" rules that are "solely 
the concern of the agency proper and, therefore, ... do not affect 
the members of the public to any extent" will continue to be exclud- 
able under section 553(a)(2), even after section 553(a)(1) is repealed.'"* 
So, for example, "rules as to leaves of absence, vacation, travel, etc." 
of the armed forces are exempted by the "agency management or 

303. 230 F. Supp. at 46 (emphasis original). 

304. 1957 House Survey, supra note 39, pt. IIC (Independent Agencies — Housing 
and Home Finance Agency), at 1629. 

305. Attorney General's Manual, supra note 13, at 18. They would undoubtedly 
also be exempt under the more limited "unnecessary" exclusion of section 553(b)(B). 


personnel" portion of section 553(a)(2).^*** So, too, virtually all armed 
forces rules dealing with such things as record-keeping, financial 
management and accounting procedures, working hours and work- 
ing conditions of personnel, safety programs for personnel, the care, 
maintenance, and inventory of armed forces property, and the like, 
would also be exempted under this provision.^'^'^ Virtually all com- 
mands by superiors to subordinates in the armed forces, directing 
individuals as to the manner in which they are to carry on their usual 
day-to-day activities, and prescribing the nature of those activities, 
probably would also be exempt on this basis, if they are "rules." This 
section 553(a)(2) exemption would, therefore, exclude an unusually 
high proportion of the rules of the military establishment from usual 
procedures because of the peculiar nature of its day-to-day functions, 
operations, and organization. 

But the "agency management or personnel" exemption should 
not permit agencies to avoid usual procedures by merely phrasing 
regulations in terms of directives to its employees: 

[A]lmost any rule may be put in the form of an instruction directed to 
subordinates even though its effect and purpose is to regulate private 
activities; e.g., how customs authorities are to proceed in valuing 
importations of merchandise .... In other words, a regulation may 
seem to be for mere housekeeping or procedural purposes and yet, 
in effect, govern the substantive rights of parties.^os 

The key, then, as Seaboard World Airlines notes, is whether the rule 
in question "substantially affects outside parties." If it does, then it 
should not be excludable under this section 553(a)(2) exemption. 

Rules determining the policies of the armed forces with respect 
to the acquisition and disposal of property, or rules governing the 
terms and conditions of public access to and use of armed forces 
property should not, therefore, be excludable from section 553 on 
the basis of this exemption.^"^ A closer case is presented with respect 

306. Id. 

307. S. 518 Hearings, supra note 127, at 374 (Department of Commerce). 

308. S. 1663 Hearings, supra note 104, at 685 (Professor Carl McFarland, University 
of Virginia Law School). 

309. But see S. 518 Hearings, supra note 127, at 374 (Department of Commerce), 
objecting to S. 518, based on the assumption that the "agency management" exemption 
excludes from section 553 "procurement policies" and "utilization and disposition of 
excess and surplus property." As already noted, rules on these subjects made by the 
commander of each base in light of the peculiar local conditions applicable to his 
situation may be exempt under section 553(b)(B) on the ground that the sheer number 
of such diverse rules involved may make it "contrary to the public interest" to follow 
usual procedures for all of them. This logic would not, however, apply to rules on this 
subject that are service- or Department-wide. 


to the rules prescribing the terms and qualifications for initial enlist- 
ment into the armed forces. Those rules certainly relate to agency 
"personnel"; but they are primarily directed at the public and its 
rights rather than at the rights of existing agency staff. The above 
rules may not, then, relate "solely to the internal management of an 
agency" to use the language of section 3 of the APA, which is sup- 
posedly congruent in scope with the section 553(a)(2) exemption. 
After all, rules of this sort may be deemed to "substantially affect 
outside parties" within the meaning of the Seaboard case. 

It is recognized, however, that there may be substantial disagree- 
ment over the precise scope of the "agency management and per- 
sonnel" exception in section 553(a)(2), and that agencies may not 
readily accept the delineation of that provision's ambit offered above. 
It should also be reiterated that the definition of the term "agency 
management or personnel" offered here may not be supportable be- 
cause the language of that provision is in fact broader than the APA 
section 3 terminology sought to be superimposed upon it. Repeal of 
section 553(a)(1) may also increase the possibility of over-reliance 
upon this portion of section 553(a)(2), or increase agency efforts to 
expand its scope beyond that described above. If that happens, and 
the scope of this exemption in fact proves to be broader than this 
brief and superficial examination suggests, there will be time enough 
to consider narrowing it. 

E. Conclusion Concerning Existing Alternatives to 
Section 353(a)(1) 

A number of agencies utilizing the section 553(a)(1) exclusions 
have admitted, in varying degrees, that potentially undesirable con- 
sequences that may result from a repeal of that exemption could be 
handled by the remaining exemptions contained in section 553. 
While all of the previously discussed provisions were alluded to, the 
most prominently mentioned and most significant were the "good 
cause" exemptions of sections 553(b)(B) and 553(d)(3). Even the 
Department of the Navy has concluded that "the coverage of the 
exemptions in subsection (b) [(A) and (B) of section 553] can be very 
broad," and, therefore, much of its rule-making may be excluded 
from usual procedures under those exemptions.^^^ 

The Atomic Energy Commission noted that "[i]n our view the 
'good cause' exemption set forth in [section] 553(b) could be con- 

310. 1969 Survey Response. The Headquarters, Defense Supply Agency, Department 
of Defense, concluded that if "section 553(a)(l)-(2) of the act were repealed, most of 
these agencys' regulations could probably be exempt under section 553(b)(A)-(B)." Id. 


strued to embrace a number of situations now exempted under [sec- 
tion] 553(a)(l)-(2)." But it questioned whether that provision would 
be construed to cover all situations in need of such exemption. How- 
ever, the Commission seemed most concerned in its reservation with 
subsection (a)(2) situations rather than with subsection (a)(1) situa- 
tions.^^^ On the other hand, the Federal Power Commission's state- 
ment was unequivocal: 

In those instances in which the Commission departed from the 
notice, hearing and effective date requirements of [section] 553(b)-(e), 
it relied specifically on the exceptions set out in 553(b)(A and B) and 
in [section] 553(d). Insofar as the foreign affairs functions of the 
Commission are concerned, we believe that these specific exemptions 
would be entirely sufficient for this aspect of the Commission's reg- 
ulatory work.312 

Similarly, the Department of Agriculture noted with respect to its 
Defense Production Act^^^ responsibilities: 

No disadvantages are foreseen [from repeal of section 553(a)(1)] pro- 
vided authority would be continued to omit notice and opportunity 
for public comment in any case of rule-making where this procedure 
is deemed for good cause to be impracticable, unnecessary or contrary 
to the public interest and other exemptions now in [section] 553 
(b)-(d) are retained.^!* 

The Office of Foreign Direct Investments (OFDI) in the Com- 
merce Department also stated that in light of other exemptions con- 
tained in sections 553(b)-(d) "there would be no disadvantage to 
OFDI if [section] 553(a)(1) . . . [were] eliminated/'^i^ Similarly, the 
Domestic and International Business Bureau (DIB) of the same De- 
partment commented: 

We believe that the several specific exemptions contained in [section] 
553(b)-(e) would be sufficient to deal with situations in the DIB area 
involving rulemaking, provided the interpretation given the exemp- 
tions is broad enough to exempt agencies from following public rule- 
making procedures in situations where this could be internationally 
detrimental to the U.S. (e.g., Implementation of an unpublished 
international agreement), ^^^ 

In the same spirit, the Department of Treasury admitted that 

311. 1969 Survey Response. 

312. Id. 

313. 50 U.S.C. App. §§ 2061-168 (1970). 

314. 1969 Survey Response (Regulatory Division, General Counsel). 
515. Id. 

316. Id. 


if all of Section (a)(l)-(2) was repealed, in the preparation of regula- 
tions which could not be published until announced by the Secretary, 
and in which speed and its requisite corollary, secrecy, are necessities, 
and advanced publicity and public participation opportunities, im- 
possibilities, we recognize that we could resort to publication in our 
rule of a finding that notice and public procedures are contrary to 
the public interest.^i' 

But its Office of Foreign Assets Control noted that while "a liberal 
recourse to the exception [section 553(b)(B)] would permit the Con- 
trol to continue to operate, virtually every public document of the 
Control would have to contain a finding that notice and public pro- 
cedure is contrary to the public interest."^^^ As noted earlier, the 
availability of class exemptions, where justified, eliminates this argu- 
ment for retaining 553(a)(1). 

Previous discussion seems to demonstrate that a repeal of section 
553(a)(1) accompanied by a construction of sections 553(b)(B) and 
553(d)(3) along the lines suggested would be an excellent means by 
which to reconcile the conflicting societal interests involved in rule- 
making. The exemptive language of sections 553(b)(B) and 553(d)(3) 
should not and need not be so broadly construed that it becomes a 
meaningless limitation on agency discretion, forestalling adequate 
public participation in rule-making; nor should it be so narrowly 
construed that it becomes ineffective to deal with the real problems 
which admittedly might be faced by certain agencies, if section 553 
(a)(1) were repealed. 

As noted earlier, this kind of qualified exemption will remove 
from the requirements of the rule-making section virtually all of 
those situations now cited to justify the across-the-board, unqualified 
exceptions presently contained in section 553(a)(1). Unlike the latter 
provision, however, the former has the advantage of excluding from 
the strictures of section 553(b)-(d) only those specific rule-making 
situations in which competing interests of a high order clearly out- 
weigh the interests in public participation. 

Furthermore, repeal of the section 553(a)(1) exemptions will also 
be advantageous because the competing values involved will be more 
adequately accommodated in another fashion. Unlike the current 
unqualified exemption of subsection (a)(1) rule-making from every 
provision of section 553, the sections 553(b)(B) and 553(d)(3) solution 
would exempt only particular instances of such rule-making from 
the specific subsections whose application in those instances would 

317. Id. 

318. Id. 


be unreasonable. So, even if prior public participation under section 
553(b)-(c) should be eliminated in a particular case of rule-making, 
the agency will still be required in most circumstances, as section 
553(e) unqualifiedly demands, to give persons a right to petition for 
the issuance, amendment, or repeal of a rule. As noted previously, 
special exemption from that requirement seems to be justified only 
in the situation where the required statement of reasons under sec- 
tions 553(e) and 555(e) must itself be kept confidential. That con- 
tingency is already taken care of by section 552(b)(1). 

One final point with respect to the scope of the statutory reform 
proposed here deserves note. Rule-making is defined by the APA as 
the process for formulating "agency statements of general or par- 
ticular applicability and future effect designed to implement, inter- 
pret or prescribe law or policy . . . ."^^^ The procedures of section 
553 are better adapted to dealing with rule-making of general ap- 
plicability than to dealing with rule-making of particular applica- 
bility. Therefore, requiring adherence to the procedures of section 
553 in the case of the latter class of subsection (a)(1) rule-making 
may create larger burdens and smaller benefits than requiring ad- 
herence to those procedures for similar rule-making of general ap- 

An argument can be made, however, that there is no problem in 
this connection because the rule-making provisions of section 553 do 
not apply to rules of particular applicability. This conclusion as to 
the applicability of section 553 might be justified on the following 
basis. Subsection (a)(1)(D) of section 552, the freedom-of- information 
provision of the APA, only requires publication of "substantive rules 
of general applicability adopted as authorized by law, and statements 
of general policy or interpretations of general applicability . . . ." Rules 
of particular applicability need not be published. According to sec- 
tion 552(a)(2)(B), agencies need only make them available for public 
inspection and copying. Requiring publication under section 553(b) 
of the terms of a proposed rule of particular applicability or a descrip- 
tion of its intended scope, followed by an opportunity for public 
participation therein, when section 552 specifically provides that an 
agency need not even publish such a rule when it is finally adopted, 
would be foolish and inconsistent. Section 553, therefore, must not 
apply to rules of particular applicability. If so, even after the repeal 
of subsection (a)(1) much "military and foreign affairs function" 
rule-making may still be excluded from section 553 on this basis. 

319. 5 U.S.C, § 551(4) (1970) (emphasis added). 


After all, a substantial portion of the rule-making involving these 
subjects is of particular applicability. For example, much of this 
nation's foreign policy and many of the orders issued by military 
authorities, if they be rule-making, are rule-making of particular 
applicability because they are specifically addressed to named coun- 
tries or persons. 

Despite the above argument, the provisions of section 553 prob- 
ably do apply to rule-making of particular applicability, except as it 
is specifically excluded from section 553 by some express provision 
thereof. The distinction drawn in section 552 between rules of 
general applicability that must be published in the Federal Register, 
and rules of particular applicability that need only be made available 
for inspection and copying, does not necessarily compel the conclu- 
sion that the latter class of rules is outside the requirements of section 
553. The situation here is different from that where an agency must 
keep certain rules secret under section 552, or has the discretion to do 
so under that provision. It is not possible to argue sensibly that the 
advance public notice requirements of section 553 apply to any rules 
of that sort. But it is possible that advance published notice of pro- 
posed rules of particular applicability, with an opportunity for public 
comment thereon, might be a requirement for those rules even 
though when they are adopted, they need not be published but only 
be made available for public inspection and copying. It should be 
recalled that the primary purpose of the section 553 rule-making 
procedures is to assure wiser rules by educating the decision makers 
so that they will be fully informed before any new rules are finally 

Furthermore, neither the express language of section 552 or sec- 
tion 553, nor their legislative history, indicates that the rule-making 
provisions were meant to be inapplicable to rules of particular ap- 
plicability. Indeed, the language of section 553 suggests that the rule- 
making provisions do apply to such rules. Section 553(b) states 
that "[g]eneral notice of proposed rule making shall be published in 
the Federal Register, unless persons subject thereto are named and 
either personally served or otherwise have actual notice thereof in 
accordance with law." So, if persons to whom rule-making of particu- 
lar applicability is addressed are not "personally served" or do not 
"have actual notice thereof," usual publication requirements apply. 
Similarly, the deferred effectiveness provision of section 553(d) ex- 
pressly applies to rules that are required to be published under sec- 
tion 552(a)(1)(D) and also to rules as to which "service" is required. 
The only rules as to which "service" is ever required are rules of 


particular applicability. The term "service" in section 553(d) is an 
obvious reference back to "rules addressed to and served upon named 
persons," which section 3 of the original APA exempted from publi- 
cation requirements. Despite the previous argument, therefore, 
section 553 must be deemed applicable to rules of particular applica- 
bility as well as to rules of general applicability. Consequently, if 
the "military or foreign affairs function" exemption were repealed 
the effect on such rule-making of particular applicability should be 
considered. Such a consideration would reveal, however, that no 
serious or insurmountable difficulties would be encountered with 
respect to this sort of rule-making after the repeal of section 553(a)(1). 

By using one of two exemptions, an agency can avoid the trouble 
associated with opening too wide the role of public participation in 
rule-making of particular applicability. As noted, section 553(b) per- 
mits agencies to avoid prior publication of notice in the Federal 
Register if "persons subject thereto are named and either personally 
served or otherwise have actual notice thereof in accordance with 
law." This means that after the repeal of section 553(a)(1), agencies 
will still not be required to publish advance notice of such rule- 
making of particular applicability if they give the persons "subject 
thereto" personal notice and "an opportunity to participate in the 
rulemaking through submission of written data, views, or argu- 
ments." This seems to be the result of a reconciliation of the lan- 
guage "persons subject thereto" in section 553(b) and "interested 
persons" in section 553(c). 

Furthermore, to the extent that it is more "impracticable, un- 
necessary, or contrary to the public interest" to follow normal pro- 
cedures for subsection (a)(1) rule-making of particular applicability 
than for such rule-making of general applicability, the section 553 
(b)(B) and section 553(d)(3) exemptions can adequately handle the 
problem. As a result, one may expect greater resort to these exemp- 
tions for subsection (a)(1) rule-making of particular applicability 
than for such rule-making of general applicability. The various other 
exemptions now contained in the rule-making provision will also 
adequately deal with any special problems that arise from the applica- 
tion of section 553 to subsection (a)(1) rule-making of particular 
applicability, as well as to such rule-making of general applicability. 

VI. Other Proposals To Modify Section 553(a)(1) 

During the past decade, a number of bills have been introduced 
to reform federal administrative procedure. The most important of 


these were S. 2335 and S. 1663 of the Eighty-eighth Congress, and 
S. 518, S. 2770, and S. 2771 of the Ninetieth Congress. With the ex- 
ception of S. 277 P^*^ all of these proposals to revise the APA elimi- 
nated the unqualified exclusion from section 553 for rule-making 
involving "military or foreign affairs functions." In its place, they 
substituted varying kinds of narrower qualified exemptions for such 
rule-making. So did a more recent ABA proposal. 

Of all the proposed substitute exemptions for section 553(a)(1), 
only one would have granted a special exemption for this sort of rule- 
making on a basis other than a need for secrecy. S. 2770 would have 
entirely excluded from section 553 "rulemaking required by an Exec- 
utive order to be exempt from this section in the interest of national 
defense or foreign policy."^^^ This provision obviously would have 
vested authority in the President to exclude any rule-making affecting 
"national defense or foreign policy" from the provisions of the rule- 
making section if he thought that would be desirable. Rule-making 
would have been exempt even if it did not "involve" the "national 
defense or foreign policy" as such, provided the President found that 
an exemption was "in the interest of national defense or foreign 

The possibility of any effective check on the President in his use 
of such a broad provision is probably remote. Of course, one may 
assume that unless the rule-making excluded from section 553 by 
an executive order was the product of authority vested wholly 
and exclusively in the President, a court might review the determina- 
tion that the exclusion was "in the interest of national defense or 
foreign policy."^^^ A court would set aside that determination, how- 
ever, only if a clear abuse of discretion appeared. Given the vagueness 
of the standard, almost any determination by the President would be 
upheld. After all, might it not be "in the interest of national defense 
or foreign policy" to avoid usual procedures for subsection (a)(1) 
rules on the ground that such action would make it less likely that 
the rule-making would encounter political opposition or public 

320. S. 2771, 90th Cong., 1st Sess. § 553(h) (1967). 

321. S. 2770, 90th Cong., 1st Sess. § 553(h)(1) (1967). 

322. But see EPA v. Mink, 41 U.S.L.W. 4201, 4205 (U.S., Jan. 22, 1973), decided just 
as this Article went to press, holding that in all cases the legislative history of 5 
U.S.C. § 552(b)(1) (1970) "makes wholly untenable any claim that the Act intended to 
subject the soundness of executive security classifications to judicial review .... It 
also negates the proposition that [section 552(b)(1)] authorizes or permits in camera 
inspection of a contested document ... so that the court may separate the secret from 
the supposedly nonsecret and order disclosure of the latter." A contrary legislative 
history should, however, induce the opposite conclusion. 


outcry, or that such action would make this rule-making less ex- 
pensive and time consuming? 

Thus, the substitute exemption for section 553(a)(1) found in 
S. 2770 is undesirable for the same reasons that elimination of the 
current exemption is sought. Practically, the S. 2770 provision vests 
in the President too much discretion to avoid usual rule-making pro- 
cedures when they are not, in fact, "impracticable, unnecessary, or 
contrary to the public interest." Yet, the approach of S. 2770 is cer- 
tainly superior to current section 553(a)(1) because under this pro- 
posal the President must act affirmatively to exempt any such 
rule-making before usual procedures may be ignored. This obviously 
is an advantage over the present situation because the burden is at 
least put on the agencies desiring an exemption for such rule-making 
to convince the President that they should have it. 

The difficulty is, however, that the President is likely to honor 
almost any request by trusted subordinates for an exemption from 
section 553 in these particular areas.^^^ Past history clearly indicates 
excessive concern by our presidents with safeguarding the supposed 
interests of national defense and foreign policy, even at the expense 
of other important competing societal values, which may, on occa- 
sion, properly be considered more important. Executive orders ex- 
cusing rule-making from section 553 "in the interest of national 
defense or foreign policy" are, therefore, not likely to be difficult 
for agencies to obtain. What is more, under S. 2770 the exempting 
executive order need not even be specific. Agencies may infer that 
they are entitled to such an exemption on the basis of an existing, 
general "Executive order." Even if this were not so, however, the 
ultimate conclusion would remain unaltered. For all of the reasons 
noted above, the solution proposed by S. 2770, while an improve- 
ment over current section 553(a)(1), is unacceptable. Outright repeal 
of the exemption for rule-making involving "military or foreign 
affairs functions," without more, seems best. 

Nevertheless, a number of other substitutes for section 553(a)(1) 
have been proposed and deserve careful examination. All of these 
proposed substitutes were qualified exclusions relating in one way 
or another to the need for secrecy of some such matters. More spe- 
cifically, S. 2335 provided that the rule-making section "shall not 
require notice of or public participation in rulemaking . . . required 
to be kept secret in the protection of the national security."324 § jggg 

323. S. 518 Hearings, supra note 127, at 334 (Mr. Frank Wozencraft, Assistant 
Attorney General, Department of Justice). 

324. S. 2335, 88th Cong., 2d Sess. 5 1003(f) (1964). 


provided that rule-making involving "any military, naval, or foreign 
affairs function of the United States requiring secrecy for the pro- 
tection of the national defense" was exempted from every require- 
ment of the rule-making provision.^^s Neither of these provisions 
expressly demanded that an executive order impose the require- 
ment of secrecy. Moreover, neither recognized the need for secrecy 
for "foreign policy" purposes as opposed to "national defense" pur- 
poses. And neither expressly demanded any narrow tailoring of 
secrecy needs as would have been the case if the exemption only 
applied to rule-making "specifically" required to be kept secret. 

The Senate subcommittee revision of S. 1663 differed from the 
above exclusions somewhat. It provided that all rule-making involv- 
ing "any military, naval, or foreign affairs function of the United 
States required by Executive order to be kept secret for the protec- 
tion of the national defense or foreign policy" was to be exempted 
entirely from the requirements of the rule-making provision.^^^ The 
addition of the specific requirement of an "Executive order" and the 
use of secrecy for the purpose of protecting "foreign policy" as well 
as "national defense" are notable. 

S. 518 was almost identical to the latter provision, for it would 
have exempted from the rule-making provision all "rulemaking re- 
quired by an Executive order to be kept secret in the interest of the 
national defense or foreign policy."^^^ The recent American Bar 
Association proposal differs only by its addition of the word "spe- 
cifically," so that only rule-making "specifically required by Exec- 
utive order to be kept secret in the interest of the national defense 
or foreign policy" is exempted from the rule-making provision.^^* 
This language is precisely the same as that now appearing in the 
freedom-of-information provision of the APA, section 552(b)(1). As 
the ABA Committee noted, in making its proposal: 

Obviously, sensitive matters of national defense and international 
relations are by their nature not appropriate subjects for public 
participation. Not all the functions of the Departments of Defense 
and State are of this character, however, and to the extent that [s]ec- 
tion 553(a)(1) may be so construed, it is desirable that the provision 
be narrowed to the same ambit circumscribed by the Freedom of 
Information Act. . . . The proposed amendment to [section] 553(a)(1) 
would make explicit that it is not enough to exempt a matter from 
rulemaking that it is related to a military or foreign affairs function, 

325. S. 1663, 88th Cong., 1st Sess. § 4(1) (1963). 

326. Revised S. 1663, 88th Cong., 1st Sess. § 4 (1963). 

327. S. 518, 90th Cong., 1st Sess. § 4(h)(1) (1967). 

328. See Crowther, supra note 9, at 8. 


in absence of a specific declaration by Executive order that the in- 
terest of national defense or foreign policy require that they be kept 
secret. Public participation in rulemaking would then generally be 
the rule rather than an exception in such activities as the formulation 
of Armed Services Procurement Regulations.^^o 

It has previously been argued in this Article that section 552(b)(1) 
already exempts rule-making from section 553 to the extent an "exec- 
utive order" "specifically" requires that the rules or the reasons 
therefor must be kept secret in the "interest of national defense or 
foreign policy." That is, in the formulation and promulgation of 
valid rules agencies may ignore usual rule-making procedures to the 
extent that adherence to those procedures would interfere with a 
valid secrecy requirement imposed under section 552(b)(1). No ob- 
jection, therefore, can be urged against adding a provision to the 
rule-making section expressly recognizing this fact. But if such a pro- 
vision is added, its language certainly should be congruent with the 
language of section 552(b)(1). This is, of course, the position of the 
American Bar Association. There are a number of very good reasons 
to support that view. 

If special exemptive language to deal with problems of secrecy 
were added to section 553 at the time of subsection (a)(l)'s repeal, 
an anomoly would be created if the wording chosen were substan- 
tively broader than that found in section 552(b)(1). Agencies would 
then be authorized to avoid usual rule-making procedures on the 
grounds of secrecy in some situations in which the public would be 
entitled to obtain documents relating to that subject matter under 
section 552. As noted earlier, there is no reason to permit any greater 
resort to secrecy as a basis for avoiding usual rule-making require- 
ments under section 553 than there is for avoiding usual freedom- 
of-information requirements under section 552. A similar difficulty 
would be encountered if the language of a substitute for section 
553(a)(1) were substantively narrower in scope than that of section 
552(b)(1) because in that case an agency might be forced to reveal 
matters under the requirements of section 553 that it had a right to 
suppress under section 552. 

In addition, it is desirable to have determinations of the necessity 
for exemption from usual rule-making requirements made by an 
"Executive order."^^" The policy of openness of government pro- 

329. Id. at 18-20. 

330. "The Department of Justice and the Department of State insisted that the 
requirement of an Executive Order was 'unnecessary,' would add a 'layer' and could 
be better handled by legislative oversight." Carrow, Revision of the Administrative 


ceedings is so important that a final determination to depart from 
it on a purely discretionary basis because of an alleged need for 
secrecy should be made only at the highest level. An excuse based 
on the need for secrecy is, after all, so subject to abuse, and such a 
tempting vehicle by which government officials may seek to hide 
improprieties, that it should be available only after a determination 
of its necessity has been made by the most politically responsible 
official, the President. Of course, it is understood that such an "Exec- 
utive order" requirement cannot and will not ensure personal con- 
sideration of the merits of each such order by the President if he is 
prepared to rely completely on the advice of his advisors by auto- 
matically signing any order on this subject that they put before him. 
In support of this requirement of an "Executive order" it should 
also be noted that courts reviewing the propriety of the use of an 
exemption predicated on a need for secrecy are not likely to probe 
very deeply, if at all.^^^ That lack of close judicial scrutiny is less 
likely to be disastrous if the decision to avoid usual rule-making 
procedures based on a need for secrecy is made at the highest level, 
because at that level the agency's decision is most likely to be 
responsible and justifiable. 

An executive order that exempts certain rule-making from the 
procedures of section 553 should be reasonably specific as to the 
precise kinds of rule-making covered in the order. Specificity would 
avoid some unjustified reliance on executive orders by subordinate 
officials who wish to dispense with normal rule-making procedures. 
The term "specifically" in section 552(b)(1) is, therefore, very desir- 
able and should be imported into any analogous exemption added to 
the rule-making provision. Section 552(b)(1) is also worthy of emula- 
tion in section 553 because it recognizes the legitimate use of secrecy 
not only for "national defense" purposes but also for "foreign policy" 
purposes. Secrecy exemptions for either purpose should be available 
because they are, in practice, necessary.^^^ All of these points militate 
in favor of the ABA proposal — using language identical to section 
552(b)(1) in a special exemption from section 553 for rule-making 

Procedure Act: A Comparative Analysis of Current Bills and a New Proposal, 21 Ad. 
L. Rev. 227. 230 (1969), citing S. 518 Hearings, supra note 127. at 332. 318. 

331. They may not probe at all if the Act's legislative history precludes review. 
See EPA v. Mink, discussed in note 322 supra, decided just as this Article went to press. 
But see United States v. Reynolds. 345 U.S. 1. 11 (1953); K. Davis, supra note 5, §§ 3A.16. 
3A.33 (Supp. 1970). 

332. See S. 1663 Hearings, supra note 104. at 354 (Department of Justice); id. at 392 
(Department of the Treasury); id. at 387 (Department of State). 


which must be kept secret in the interest of "national defense or 
foreign policy." 

However, the ABA proposal is arguably undesirable because it 
may authorize the President to treat the need for secrecy of a subject 
under the rule-making provision in a manner that is inconsistent 
with his treatment of the same subject under the freedom-of-infor- 
mation provision. This could not happen if the President were re- 
duced to relying solely on section 552(b)(1) for secrecy exemptions 
from both the freedom-of-information section and the rule-making 
section. In that case, rule-making could be exempt from section 553 
on the basis of a need for secrecy in the interest of "national defense 
or foreign policy" only if an executive order also makes the matter 
to which those rules pertain exempt under section 552(b)(1). The 
argument is that if the President does not think that the matter 
involved needs to be kept secret, and, therefore, refuses to issue an 
executive order to that effect under section 552(b)(1), he should not 
be permitted to exempt the matter from section 553 on the basis of 
a special need for secrecy. 

But this objection to the ABA proposal may not be realistic or 
sound. Even under section 552(b)(1), the "Executive order" need 
not be of the all-or-nothing variety, nor should it be. The term 
"matter" as used in section 552(b)(1) admits of executive authority 
to define in any number of different ways exactly what must be kept 
secret. So, the "matter" may include the texts of certain rules them- 
selves, but no other documents relating to the subject to which the 
rules pertain, if in fact the President ascertains that secrecy is re- 
quired in the interest of "national defense or foreign policy" for the 
rules but not for the other documents. Or, the President may order 
that the reasons for the rules be kept secret but not the rules them- 
selves. This is as it should be, since utmost flexibility in this matter 
should properly reside in the President, and is available under the 
ABA proposal and section 552(b)(1). 

For the same reason the following objection to the ABA pro- 
posal is spurious: 

If an Executive order makes a finding that the national interest re- 
quires secrecy in the case of a particular type of foreign policy deci- 
sion-making, there will be an inevitable inhibition on employing 
other, less formal [and hence more secrecy-maintaining] procedures 
of consultation with interested parties, than have been employed in 
the past.838 

333. S. 518 Hearings, supra note 127. at 388 (Department of State). 


Not sol The executive order requiring rule-making to be exempt 
from section 553 because of a need for secrecy need not interfere 
with those other procedures, if the President so chooses. Neither the 
ABA proposal nor section 552(b)(1) is an all-or-nothing provision; 
they vest discretion in the President to adopt intermediate, qualified, 
or part-way stances in the interest of maintaining the requisite secrecy. 

Another more serious objection to the ABA proposal is that it 
would "thrust too many duties on an already overburdened Presi- 
dent, "^^^ since it would permit exemption of rule-making from sec- 
tion 553 on the ground of secrecy only if that secrecy is "specifically" 
required by an "Executive order." According to the Atomic Energy 
Commission, the "course of submitting each proposed exemption to 
the President for ad hoc determination would impose on the Presi- 
dent an unreasonable continuing burden. "^^^ 

But is this burden any different or greater than that already im- 
posed on the President by section 552(b)(1)? Congress made the de- 
cision at the time that provision was enacted that in light of the 
important values involved, imposition of this obligation on the Pres- 
ident was justifiable. As pointed out earlier, enactment of the ABA 
proposal is unnecessary because the President is already charged 
with making determinations under section 552(b)(1) that would in 
effect exempt certain rule-making from section 553 because of the 
need for secrecy in the interest of "national defense or foreign policy." 
No further burden would, therefore, in fact be imposed on him by 
the ABA proposal because it would only be declaratory of his present 
obligations. Consequently, this objection to the ABA proposal does 
not deserve serious consideration since Congress resolved the basic 
policy question when it enacted section 552(b)(1). 

The Atomic Energy Commission has, however, sought to dis- 
tinguish section 552(b)(1) from the ABA proposal for section 553 — 
deeming the latter unsuitable for the rule-making provision even 
though the former may be suitable for the freedom-of-information 
provision. It said: 

While we recognize that the modified exception [for the rulemaking 
provision] is the same as that in [section 552(b)(1)] the considerations 
relating to public information and rulemaking are sufficiently dif- 

334. S. 1663 Hearings, supra note 104, at 679 (Professors Marvin Frankel & Walter 
Gellhom, Columbia University Law School). See also id. at 480 (Department of Com- 

335. 1969 Survey Response. 


ferent as to warrant different treatment with respect to exemptions 
from their requirements.^^e 

However, the AEC does not explain why the considerations should 
be different with respect to exemptions from these two provisions to 
deal with a unitary problem, the need for secrecy in the interest of 
"national defense or foreign policy." 

Another objection to an ABA type proposal is that "the Exec- 
utive order that would be needed if section [553] procedures were 
to be omitted might in itself destroy the very secrecy it was intended 
to enhance." The following illustration is provided: 

Consider, for example, the making of rules pertaining to access to a 
secret missile base or pertaining to methods of subsidizing the 
military operations of friendly powers. Unless the President were to 
issue an Executive order, whicli, of course, would be immediately 
available for publication, section [553] procedures would have to be 
followed; publication of the absolving Executive order would, how- 
ever, perforce disclose some of the very information sought to be 
withheld "for the protection of the national defense or foreign 

Two points should be made with respect to this argument. First, if 
it is a valid objection with respect to an "Executive order" require- 
ment for the rule-making provision, it is equally valid with respect 
to the "Executive order" requirement for the freedom-of-information 
provision. Second, it is based on a misconception concerning the 
precise nature of the executive order required under the ABA pro- 
posal for section 553, and under section 552(b)(1). Obviously, the 
required executive order need not be of a nature or specificity that 
would divulge in any way the very matters sought to be concealed 
in the interest of "national defense or foreign policy." With respect 
to the above illustration, for example, all that would be necessary is 
an executive order requiring secrecy for rule-making and documents 
(1) pertaining to access to secret missile bases, or (2) pertaining to the 
methods of subsidizing the military operations of friendly powers. 
The usual requirements of sections 553 and 552 would thereby be 
swept aside for such matters. No more specificity is required to be con- 
sistent with the purpose of the ABA proposal and section 552(b)(l).3^8 
One last objection to the ABA proposal — and more generally to 
the proposal to delete section 553(a)(1) — is that the ABA proposal 
and other similar substitutes would merely interject "new definitions 

336. Id. 

337. S. 1663 Hearings, supra note 104, at 679 (Professors Frankel & Gellhom). 

338. See K. Davis, supra note 5. §§ 3A.16, 3A.33 (Supp. 1970). 


which make everybody wonder — what is the difference between na- 
tional defense and military affairs, what is the difference between 
foreign policy and foreign affairs, what does the executive order 
really cover?"^^^ 

The difficulty with this line of argument is apparent. At present 
both sets of terms are already in the APA — "military and foreign 
affairs function" in section 553(a)(1) and "national defense and for- 
eign policy" in section 552(b)(1), Neither set of terms is intrinsically 
clearer or more developed by history and practice than the other. 
The differing language of these two sets of terms in the same Act 
also raises unhappy and unnecessary problems of comparative con- 
struction. Adding an ABA-type provision to section 553 in lieu ot 
section 553(a)(1) would, however, improve the situation, not worsen 
it. Then, at least, there would only be one set of terms to deal with 
in applying the Act — "national defense and foreign policy." Indeed, 
mere repeal of section 553(a)(1) would be beneficial for the same 
reason. As to the objection that under the ABA proposal construc- 
tion of executive orders would be unduly burdensome, it need only 
be noted that this burden already rests on the agencies under section 

It should be reiterated that enactment of an express provision 
permitting exemptions from section 553 for rule-making "specifically" 
required by an "Executive order" to be kept "secret in the interest 
of national defense or foreign policy" is probably unnecessary as a 
matter of law. Enactment of such a provision is, however, desirable 
because it will make agencies feel more secure to have the present 
inferential relationship between sections 552(b)(1) and 553 expressly 
spelled out. But the result will be the same if the only action taken 
is that which is clearly justified and most pressing — simple repeal of 
section 553(a)(1). Agencies are not now required by section 553 to 
violate a proper executive order under section 552(b)(1). To read the 
current provisions any other way would be absurd. 

VII. May Congress Effectively Implement the 
Reform Proposed? 

Is there any constitutional impediment to the procedural reform 
proposed here? To what extent, if at all, is section 553(a)(1) a recog- 
nition of an independent and exclusive executive authority in the 
military and foreign affairs area which may not be regulated by Con- 

339. S. 518 Hearings, supra note 127. at 334 (Mr. Wozencraft. Department of 


gress?^*" The ultimate inquiry, of course, is the extent to which 
Congress may regulate the precise procedure by which the executive 
branch makes rules involving "military or foreign affairs functions." 
To ascertain the answer to these questions, depiction of comparative 
congressional and presidential authority in these fields seems neces- 
sary. Happily, the theoretical analyses contained in several recent 
studies are particularly useful here because of the light they shed 
on this question.^*^ 

A. Scope of Congressional Power To Dictate 
Procedure for These Functions 

In Youngstown Sheet and Tube Co. v. Sawyer^*^ Justice Jackson 
suggested that there are three zones of constitutional power with re- 
spect to legislative and executive authority in the military and for- 
eign affairs area. The first is a zone of constitutional power that is 
exclusively presidential. In that zone the Executive may act lawfully 
even against the clearly expressed command of Congress. The second 
is a zone of exclusive congressional authority in which the legislature 

340. Some comments with regard to foreign affairs functions suggest a con- 
gressional incapacity based on the Constitution's distribution of such powers among 
the several governmental branches: 

The Department of State in its daily functions is, in most cases, carrying out 
on behalf of the President the exercise of his constitutional power to conduct the 
foreign relations of the United States. The Constitution gives the President an 
unusually large degree of authority in conducting foreign affairs .... 

The Department of State thus functions primarily in a different capacity from 
that of other departments and agencies. Most executive business entails the exe- 
cution by the departments and agencies concerned of the laws Congress has passed. 
Rules are made and individual cases considered with a view to applying the 
mandates of Congress with respect to regulation of various fields of activity and 
expenditure of appropriated funds. 

The conduct of foreign policy, by contrast, is generally not dictated by statu- 
tory standards. 
S. 518 Hearings, supra note 127, at 387-88 (William Macomber, Assistant Secretary for 
Congressional Relations, Department of State). 

Generally speaking, the conduct of foreign affairs is not a part of the adminis- 
trative process. 

In most cases foreign affairs are conducted by agents of the President carrying 
out his responsibilities in this field under the Constitution. 
Id. at 318 (Leonard Meeker, Legal Adviser, Department of State). 

Thus, there are good reasons why the foreign affairs exemption should have 
been placed in the Administrative Procedure Act at its original enactment 21 years 
ago. Those reasons remain valid today. 
Id. at 321. 

341. Pollack, Black & Bickel, The Congressional and Executive Roles in War- 
Making: An Analytical Framework, 116 Cong. Rec. 16478 (1970) [hereinafter The Yale 
Paper]; Wallace, The President's Exclusive Foreign Affairs Powers over Foreign Aid 
(pts. 1-2), 1970 Duke L.J. 293, 453 [hereinafter Wallace, Foreign Aid]; C. Zinn, Extent 
OF THE Control of the Executive by the Congress of the United States, House 
Comm. on Government Operations, 87th Cong., 2d Sess. (Comm. Print 1962). The 
following brief theoretical discussion in the text relies mainly, though not exclusively, 
on these secondary studies. 

342. 343 U.S. 579, 635-38 (1952) (concurring opinion). 


may act lawfully even against the clearly expressed command of the 
President. In between these poles of exclusive executive and exclu- 
sive legislative power is a third "zone of twilight in which [the Pres- 
ident] and Congress may have concurrent authority, or in which its 
distribution is uncertain. "^^^ Either of these branches of the national 
government can act without the other in this twilight area. But 
Justice Jackson did not clearly indicate what would happen if con- 
gressional action in the twilight zone conflicted with the presidential 

There is no doubt that under the Constitution Congress and the 
President each have their own exclusive powers involving "military 
and foreign affairs functions." Similarly, there should be no doubt 
that there is a large twilight zone involving "military and foreign 
affairs functions" in which the Constitution grants authority con- 
currently to both the President and the Congress. If nothing else, 
an enumeration of the various broadly worded constitutional pro- 
visions conferring powers on Congress and the President in these 
areas illustrates this point. 

Congress has the express constitutional authority to levy taxes, 
including import duties, and to spend "for the common defense"; 
"define and punish Piracies and Felonies committed on the high 
seas, and offences against the law of Nations"; "declare War, grant 
Letters of Marque and Reprisal, and Make Rules concerning Cap- 
tures on Land and Water"; "raise and support Armies"; "provide 
and maintain a Navy"; "make Rules for the Government and Regu- 
lation of the land and naval Forces"; "provide for calling forth the 
militia" and "provide for organizing, arming, and disciplining the 
Militia, and for governing such part of them as may be employed 
in the Service of the United States. "^^* The Constitution also states 
that "Congress shall have Power to dispose of and make all needful 
Rules and Regulations respecting the Territory or other Property 
belonging to the United States. "^^^ In addition to vesting in Con- 
gress the above powers, and all authority "necessary and proper for 
carrying [them] into Execution, "^^^ the Constitution provides that 
two thirds of the Senate must concur in any treaty between the 
United States and another nation. The Senate must also concur in 
ambassadorial and major military appointments.^*^ 

On the other hand, article II specifies that "[t]he executive Power 

343. 343 U.S. at 637. 

344. U.S. Const, art. I, § 8. 

345. U.S. Const, art. IV. § 3. 

346. U.S. Const, art. I, § 8. 

347. U.S. Const, art. II, § 2. 


shall be vested in [the] President of the United States." Additionally, 
the President is designated as the "Commander in Chief of the Army 
and Navy of the United States, and of the Militia of the several States, 
when called into the actual Service of the United States." He also is 
expressly given the power "by and with the Advice and Consent of 
the Senate, to make treaties . . . [and to] appoint Ambassadors"; to 
"receive Ambassadors and other public Ministers"; and to "take Care 
that the Laws be faithfully executed."^^^ 

The fact that there may be a residuum of power in the military 
and foreign affairs areas that is vested in the national government 
"as a necessary concomitant of nationality," rather than by the ex- 
press language of the Constitution, also supports the view that there 
is a twilight zone involving "military and foreign affairs functions" 
in which authority rests concurrently in both the President and 
Congress. By definition, the Constitution does not expressly allocate 
that power between Congress and the President. But such residual 
"powers must vest somewhere, and there is nothing — nothing in the 
Constitution, nothing in history, nothing in the case law, and nothing 
in common sense — to suggest that the entire residuum vests exclu- 
sively in one or the other branch."**^ 

A logical scheme has been posited with respect to clashes of au- 
thority in the twilight zone, as well as with respect to clashes of 
authority in the zones of exclusive power: 

1) In the zone of exclusive executive power, any legislation attempt- 
ing to restrict presidential action is void and can be ignored by the 
President, even if it is "passed" over his veto. 2) In the zone of exclu- 
sive congressional power, any presidential action is illegal and can 
be prevented or ended by action of Congress. 3) In the twilight zone 
of concurrent power, either the President or Congress can act in the 
absence of initiative by the other. If both attempt to act in ways 
that bring their wills into conflict, the deadlock must be resolved 
in favor of congressional action through valid legislation, which in- 
cludes legislation passed over a presidential veto.^^*' 

That is, either branch of government is entitled to block efforts by 

348. U.S. Const, art. II, §§ 2-3. 

349. The Yale Paper, supra note 341, at 16480 (emphasis original), citing the fact 
that article I, section 8, of the Constitution makes it clear that some residual power 
vests in Congress rather than the President. See id. at 16480 n.ll. By that provision, 
Congress is given power "To make all laws which shall be necessary and proper for 
carrying into Execution the foregoing Powers, and all other Powers vested by this 
Constitution in the Government of the United States, or in any Department or Officer 
thereof" (emphasis added). The Vale Paper also states that "the lesson of history is 
that the President and Congress have shared the residual power." Id. at 16480 n.l2, 
citing Bickel, et al., Indochina: The Constitutional Crisis, 116 Cong. Rec. 15409 (1970). 

350. The Yale Paper, supra note 341, at 16479. 


the other to interfere with its exercise of military or foreign aflEairs 
powers vested exclusively therein. However, Congress may properly 
seek to regulate exercises of presidential authority in the twilight 
zone. When it does so, Congress' will should prevail over that of the 
President. The reasons for this are as follows. 

Under our Constitution there is a distinct bias toward vesting 
national power in Congress, since "Congress is closer to the electorate 
and represents a greater diversity of views than the President. "^^^ 
Its power, therefore, is more "basic" than that of the Chief Executive 
in the sense that it is a more democratic institution. Another reason 
why congressional will should prevail over that of the President in 
the twilight zone may be found in the text of the Constitution. The 
Constitution nowhere expressly provides a means by which the Pres- 
ident can impose his will over Congress' objection. It does, however, 
specifically provide a way for Congress to impose its will over the 
President's objection: It makes a bill that is passed over the veto of 
the President as much law as one that he has signed.^^^ xhe Presi- 
dent is, therefore, obligated to enforce the enactment unless, of 
course. Congress did not have the power to enact it in the first place. 
"But, in the twilight zone. Congress has power by definition."^^^ 

It should also be noted that Youngstown directly supports the 
proposition that in the twilight zone any conflict between Congress 
and the President must be resolved in favor of the former. Youngs- 
town seems to suggest that the power of the President to order seizure 
of the steel mills under the specific circumstances of that case was 
in the twilight zone. The reason the President could not lawfully 
do so there was that Congress had specifically rejected presidential 
seizure as a means for maintaining operation of vital industries dur- 
ing labor disputes.^*^* A clear intimation may be gleaned from a 
majority of the Justices in Youngstown that absent this congressional 
rejection of the seizure device, the President might properly have 
acted under his own independent authority to engage in such a 

One may briefly speculate about the nature of those "foreign 
affairs functions" delegated exclusively to the President. Certainly, 
"[ajmong the principal exclusive powers of the President is the power 

351. Id. 

352. U.S. Const, art. I, § 7. 

353. The Yale Paper, supra note 341, at 16479. 

354. 343 U.S. at 586. See also The Yale Paper, supra note 341, at 16479, 16480 n.8. 

355. 343 U.S. at 588-89 (Black, J.), 602 (Frankfurter, J.), 631 (Douglas, J.), 637-39 
(Jackson. J.), 656-59 (Burton, J.), 662 (Clark. J.). 


to recognize foreign governments and states . . . [which] 'includes the 
power to determine the policy which is to govern the question of 
recognition.' "^^^ Similarly, the power to "commence, maintain and 
sever diplomatic relations ... is exclusively the President's."^^'' The 
precise "content and mode" of this nation's diplomatic relations 
with foreign countries may also be considered exclusive.^^^ "[^]^ 
alone negotiates. . . . 'The President is the sole organ of the nation 
in its external relations, and its sole representative with foreign na- 
tions.' "^^^ The President, then, is vested with the whole authority 
to make strategic foreign policy in our diplomatic relations with 
other nations, and the whole authority to conduct that policy. It has 
been suggested that 

the traditional core would seem to embrace all diplomatic and Com- 
mander-in-Chief foreign affairs decisions, except for the following 
particular classes: 

1) Certain matters afEecting foreign commerce, including such 
derived matters as immigration and passports; 

2) Certain matters of administrative detail; 

3) The withholding of appropriations altogether; 

4) Declarations of war; 

5) Senate advice and consent to treaties and appointments. 
Thus, the Constitution, as it has developed, has struck a balance. On 
one side is exclusive executive power with respect to foreign affairs; 
on the other, congressional partidpation.^^^ 

Under this balance, however. Congress cannot, for example, properly 
use its power not to appropriate funds "to prevent the President from 
recognizing a state or government, dispatching an emissary to it, or 
specifying the rank of such emissary."^^^ 

356. Wallace, Foreign Aid, supra note 341, at 315, quoting United States v. Pink, 
315 U.S. 203, 229 (1942). 

357. Id. at 316. 

358. Id. at 317 (emphasis original). 

359. United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 319 (1936), 
quoting John Marshall in 10 Annals of Cong. 613 (1800). See also Wallace, The War- 
Making Powers: A Constitutional FlawT, 57 Cornell L. Rev. 719, 734 (1972) [hereinafter 
Wallace, War-Making]. 

360. Wallace, Foreign Aid, supra note 341, at 321 (emphasis original). 

361. Id. at 326. But see E. Corwin, The President: Office and Powers 1787-1957, 
at 432 n5^ (4th ed. 1957), quoting an 1864 report from the House Committee on 
Foreign Affairs that concluded with the following resolution: 

"Resolved, That Congress has a constitutional right to an authoritative voice in 
declaring and prescribing the foreign policy of the United States, as well in the 
recognition of new powers as in other matters; and it is the constitutional duty 
of the President to respect that policy, not less in diplomatic negotiations than 
in the use of the national forces when authorized by law; and the propriety of 
any declaration of foreign policy by Congress is sufficiently proved by the vote 
which pronounces it; and such proposition while pending and undetermined is not 
a fit topic of diplomatic explanation with any foreign power." . . . 


One may also speculate briefly with respect to some of the exclu- 
sive "military functions" conferred on the President by his Com- 
mander-in-Chief authority. It has been suggested that while "Con- 
gress may increase the Army, or reduce the Army, or abolish it alto- 
gether ... as long as we have a military force Congress cannot take 
away from the President the supreme command."^^^ This proposition 
has been elaborated more fully by the Supreme Court in Ex parte 
Milligan,^^^ where the Court stated: 

Congress has the power not only to raise and support and govern 
armies but to declare war. It has, therefore, the power to provide by 
law for carrying on war. This power necessarily extends to all legisla- 
tion essential to the prosecution of war with vigor and success, except 
such as interferes with the command of the forces and the conduct 
of campaigns. That power and duty belong to the President as 
Commander-in-Chief. Both these powers are derived from the Con- 
stitution, but neither is defined by that instrument. Their extent 
must be determined by their nature, and by the principles of our 

On this basis, it has been concluded that as Commander-in-Chief, 
the President "has sole charge of the day-to-day conduct of military 
affairs in theatres of battle, and Congress cannot control it."^^^ Pre- 
sumably, on the same basis, the President has exclusive control over 
strategic military planning or preparation for hostilities. It has also 
been suggested that the President may have exclusive power with 
respect to the selection of weapons systems.^''^ Of course, Congress 
can refuse to appropriate funds. As Senator Borah once noted: 

Undoubtedly the Congress may refuse to appropriate and undoubt- 
edly the Congress may say that an appropriation is for a specific 
purpose. In that respect the President would undoubtedly be bound 
by it. But the Congress could not, through the powers of appropria- 
tion, in ray judgment, infringe upon the right of the President to 
command whatever army he might find.^^^ 

Any effort to define precisely or to catalogue all of those "mili- 
tary and foreign affairs functions" that are beyond congressional 
control because they are vested exclusively in the President, and those 

The resolution passed the House in a somewhat diluted form, but failed to 
come to a vote in the Senate. 

362. Swain v. United States, 28 Ct. CI. 173, 221 (1893), aQd., 165 U.S. 553 (1897). 

363. 71 U.S. (4 Wall.) 2 (1866). 

364. 71 U.S. (4 Wall.) at 139. 

365. Wallace, Foreign Aid, supra note 341, at 320. 

366. Wallace, War-Making, supra note 359, at 735 & n.85. 

367. 69 Cong. Rec. 6760 (1928). 


that are within congressional control because they are vested concur- 
rently in both Congress and the President, or exclusively in Congress, 
is not required by this Article. For present purposes it is enough to 
demonstrate that Congress may properly narrow or eliminate sec- 
tion 553(a)(1), or, stated differently, that Congress may, if it wishes, 
subject a significant portion of rule-making involving "military or 
foreign affairs functions" to reasonable procedures of its own choosing 
— even if the President objects. If there be doubt concerning the 
authority of Congress to impose mandatory procedures in particular 
instances of such rule-making, that may be worked out on a case-by- 
case basis under a statutory provision that is valid on its face. 

Any effort to define precisely or to catalogue all of those "mili- 
tary and foreign affairs functions" vested wholly or exclusively in the 
executive branch also seems futile.^^^ The language of the Constitu- 
tion delegating power in these areas to the Congress and to the 
President is of little help because it is opaque and overly general at 
best. So, too, no help is furnished by the sparse litigation on this sub- 
ject. For example, while United States v. Ciirtiss-Wright states that 
the President is "the sole organ of the federal government in the field 
of international relations, "^^^ it does not deal with the questions as 
to which branch or branches of the national government have the 
authority to make that policy, and under what circumstances; and 
which branch or branches have the authority to define how such 
policy is made, and under what circumstances. One study does sug- 
gest, however, a working principle by which those exercises of presi- 
dential power in the military and foreign affairs fields that are beyond 
congressional reach can be differentiated from those exercises of such 
power that are within Congress' capacity to regulate. "[T]he power 
appropriate to each branch" should be analyzed in light of "(1) the 
special competences of each, and (2) the probable internal conse- 
quences of external actions."^^** 

The presidency's special competence "is its capacity for fast, 
efficient, and decisive action." "Power in the executive branch is 
hierarchical; in Congress it is diffuse. The essence of the legislative 
process is deliberation and compromise; in the executive process, at 
least in theory, it is command. "^^^ Another special competence of the 

368. See Wallace, War-Making, supra note 359, at 731-33. 

369. 299 U.S. at 320. 

370. The Yale Paper, supra note 341, at 16479. On the comparative competence of 
the executive and the legislature, see id. at 16479; Wallace, Foreign Aid, supra note 
341, at 455-64. 

371. The Yale Paper, supra note 341, at 16479. 


Presidency is the ability to act secretly and to keep matters confiden- 
tial.^^2 This, too, is a product of the hierarchical and unitary nature 
of executive power, since only one person need be privy to any deci- 
sion on the executive level while on the legislative level 535 people 
must necessarily be privy to any decision. The consequences of this 
have been a congenital inability on the part of Congress to keep 
controversial matters confidential.^^^ On the other hand. Congress 
is "closer to the People and reflects the diversity of their views."^"^* 
Because of its size and the fact that it "acts through deliberation, 
compromise, and consensus" it is also likely to be a more prudent 
body than the President. Congress' special capacity is, therefore, "a 
unique legitimacy to commit the resources and will of the nation. "^^^ 
In light of these special competences of the President and Congress: 

(1) When a decision in foreign or military affairs demands speed and 
decisiveness, [or, it may be added, secrecy,] there is a presumption 
that it is within the exclusive power of the President. (2) All other 
decisions are within the power of Congress. Some of that congres- 
sional power is in the twilight zone and held concurrently with the 
President. [The remainder is within the exclusive powers of Con- 

The presidential veto of the Military Authorization Act of 1965^''^ 
is consistent with this view of congressional authority, and relevant 

372. See Wallace, Foreign Aid, supra note 341, at 458 (emphasis added): 

In recognizing the superior knowledge and information of the executive, the 
Supreme Court has said, "[the President], not Congress, has the better op- 
portunity of knowing the conditions which prevail in foreign countries .... 
He has his confidential sources of information . . . Secrecy in respect of infor- 
mation gathered by them may be highly necessary . . . . " 

The speed, secrecy, and flexibility of the executive — qualities often cited as 
necessary for the effective conduct of certain aspects of foreign affairs — frequently 
have been noted. 
Qiioting United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 320 (1936). 

373. Consider, for example. Senator Gravel's public issuance of the "Pentagon 
Papers," which the Defense Department attempted to keep confidential. Gravel, Intro- 
duction to The Pentagon Papers at ix (Gravel ed. 1971). 

374. The Yale Paper, supra note 341, at 16479. 

375. Id. See also id. at 16480 n.l4: 

The competence of Congress to commit the resources and will of the nation 
is reflected in the allocation of enumerated Constitutional powers. It can commit 
the human and material resources of the nation by laying taxes, borrowing money, 
and raising an army. It can commit the will of the nation by declaring war. And, 
perhaps most significantly, it can change the very character of the nation by estab- 
lishing standards for naturalization. All these things, furthermore. Congress can do 
over the President's veto. 

376. Id. at 16479 (emphasis original). The Yale Paper omits mention of a special 
need for secrecy as a basis for exclusive executive authority under the Constitution, 
and also fails to mention the special capacity of the Executive to act in secret and to 
keep matters confidential. 

377. H.R. 8439, 89th Cong., 1st Sess. (1965). See 111 Cong. Rec. 21244-45 (1965); 
H.R. Doc. No. 272, 89th Cong., 1st Sess. (1965). 


to the ultimate inquiry being pursued in this section of the present 
Article. That Act provided that no military installation or facility 
of any kind "shall be closed, abandoned or substantially reduced in 
mission until 120 days after reports of the proposed action are made 
to the Committees on Armed Services of the Senate and House of 
Representatives. "^^^ Reports of this type could only be filed with the 
appropriate committees between January 1 and April 30 of each 
year. "If Congress adjourns sine die before 120 days pass, the report 
must be resubmitted to the next regular session of the Congress. "^^® 
President Johnson vetoed the bill on the ground that it was uncon- 

According to the President, this Act was an improper effort by 
Congress to regulate the procedure by which he could exercise mili- 
tary and foreign affairs powers conferred exclusively upon his office 
by the Constitution. In his veto message, the President relied on the 
need for speedy action in determining matters within the Act's pur- 
view as the basis for his exclusive authority over that subject. Con- 
gress could not impose this procedure on the President in the per- 
formance of those particular military and foreign affairs functions 

We cannot commit ourselves, for the prolonged period required 
by this bill, to delay action necessary to meet the realities of the 
troubled world in which we live. 

By the Constitution, the executive power is vested in the Presi- 
dent. The President is the Commander-in-Chief of the Armed Forces. 
The President cannot sign into law a bill which substantially in- 
hibits him from performing his duty. He cannot sign into law a mea- 
sure which deprives him of power for 8 months of the year even to 
propose a reduction of mission or the closing of any military installa- 
tion, and which prohibits him from closing, abandoning, or substan- 
tially reducing in mission any military facility in the country for 
what could be a year or more and must be 120 days. The times do 
not permit it. The Constitution prohibits it. 

. . . The President must be free, if the need arises, to reduce the 
mission at any military installation in the country if and when such 
becomes necessary.^^® 

The President indicated that his veto did "not mean to imply 
that a reasonable reporting provision, consistent with the legislative 
powers of the Congress, would warrant a veto."^^^ It is unclear, how- 

378. H.R. 8439, 89th Cong.. 1st Sess. § 611(a) (1965). 

379. Id. 

380. Ill Cong. Rec. 21244 (1965). 

381. Id. at 21245. 


ever, whether the President meant that congressional imposition of 
such a reporting requirement with respect to the particular type of 
rule-making involved there would be valid and, therefore, binding 
on him even if he opposed it. The President probably intended to 
suggest only that he would approve a bill containing such a simple 
reporting requirement because it would not unduly interfere with 
the proper performance of his duties. There is, of course, a very large 
difference between these two possible constructions of the veto 

According to one view. Congress may lawfully obligate the Presi- 
dent to follow a particular rule-making procedure in the performance 
of those "military or foreign affairs functions" vested exclusively in 
the executive branch so long as the procedure prescribed in no way 
interferes with the merits of the President's substantive decision or 
his ability to perform that function as expeditiously or confidentially 
as necessary. If Congress has such authority, it may impose rule- 
making procedures of its own design on the performance of all "mili- 
tary and foreign affairs functions," and the Executive would be 
bound to follow these procedures in all cases, subject only to the 
qualifications noted above. According to the contrary view, how- 
ever, the very need for reflexive or secret executive action in certain 
military and foreign affairs situations demonstrates that the particu- 
lar rule-making involved is being executed pursuant to an exclusive 
presidential power. Congress may not, as a consequence, interfere 
with the Chief Executive's exercise of that authority in any way. 
It may not, therefore, prescribe the procedures by which that func- 
tion is performed, even if those procedures do not interfere with 
his substantive decision or with his capacity to act as swiftly or con- 
fidentially as is necessary. 

As a matter of policy, both views described above may be able to 
garner some support because functionally they end in the same place. 
Under either theory the President is assured freedom to act as 
quickly and confidentially as necessary to perform those "military 
and foreign affairs functions" whose peculiar nature demands such 
a special capacity. The only difference is that under one of the 
theories Congress may impose some procedural requirements of its 
choosing on the President in the performance of these duties — re- 
quirements that would not interfere with the executive's substantive 
decision on its merits or with his capacity for speedy or confidential 
action. Under the other theory Congress could impose no procedural 
requirements when the President makes rules involving a "military 
or foreign affairs function" whose peculiar nature requires an ability 


to act reflexively or secretly. The President would obviously contend 
for the latter theory and Congress for the former. 

In support of the former view it has been suggested: 

Related to the congressional power to create programs is the power 
to specify many matters of administrative detail. These run the 
gamut from the establishment of agencies, offices, and positions, 
through the control of many personnel matters, to the disposition 
of property and the specification of operating procedures. Thus, it 
would appear that Congress' discretion is virtually unlimited in 
"prescribing the organization, procedure and business practices of 
an administrative agency . . . ."^^^ 

The assumption is that "[t]his kind of administrative detail which 
may be common to both domestic and foreign programs, is to be 
distinguished from the 'detail' of conduct and policy which forms 
part of the core area of foreign affairs [or military functions] that is 
immune from congressional control."^^^ So, for example, it is sug- 
gested that even with respect to those "military and foreign affairs 
functions" vested wholly and exclusively in the Executive, Congress 
can check and balance the President by "reports which the executive 
can be required to make."^^* 

This conclusion is qualified, however, by the observation that 
the extensiveness of these powers over "administrative detail" and 
administrative procedure "is not well defined."^^'^ Consequently, it 
is admitted that this power of Congress to force the President to 
make reports is limited by the doctrine of executive privilege, which 
originates in the residuum of independent and exclusive presidential 
powers.^^^ So, too, note the response to the following question: 

While Congress can normally prescribe operating procedures, should 
it be completely free to do so if the same have a considerable impact 
on the effect of United States . . . programs abroad [or on the exercise 
of military functions]? The burden which this might place on the 
conduct of foreign affairs [or military functions] suggests that Con- 
gress should not possess such freedom.^^^ 

Nevertheless, on occasion Congress has attempted to impose require- 

382. Wallace, Foreign Aid, supra note 341, at 307, quoting L. Meriam & L. Schmecke- 
BRiER, Reorganization of the National Government: What Does It Involve? 125 

383. L. Meriam & Schmeckebrier, supra note 382, at 125. 

384. Wallace, Foreign Aid, supra note 341, at 492 citing C. Zinn, supra note 341, 
at 19. 

385. Wallace, Foreign Aid, supra note 341, at 307-08. 

386. Id. at 475-76, 492 n.425. 

387. Id. at 481. , 


merits of administrative detail or procedure on the Chief Executive 
even where the particular "military or foreign affairs function" 
being executed is arguably vested wholly in the President.^^^ In doing 
so, it claimed to be acting under one of the powers expressly delegated 
to the legislature in this area. 

A logical objection may be raised to the broader view of congres- 
sional power. To the extent that the Constitution vests authority 
over certain "military or foreign affairs functions" wholly or ex- 
clusively in the Executive, Congress may in no way interfere with or 
regulate their exercise — substantively or procedurally. Even a pro- 
cedural regulation that does not hinder the Executive's capacity to 
make any decision on the merits he sees fit, or to react as swiftly or 
confidentially as he deems necessary in such cases, should be invalid. 
By enacting such a procedural regulation Congress is, after all, at- 
tempting to impose its will on the performance of a particular 
function delegated by the Constitution wholly to the President. 
Why should Congress have more authority over the procedure than 
the substance with respect to matters whose substance admittedly 
lies within the zone of exclusive executive power? Certainly, no 
such distinction is drawn in the language of the Constitution or in 
any known judicial opinion. 

Furthermore, it can always be argued that any procedural limita- 
tion that is imposed by Congress on rule-making in an area of exclu- 
sive executive authority will, by definition, hinder at least to some 
extent the Executive's ability to act as speedily or secretly as he may 
deem necessary in such cases. On the other hand, a suitable response 
may be that the precise nature of the particular procedure Congress 
seeks to impose will in fact determine whether or not the Executive's 
ability to act as speedily or secretly as necessary is impaired. An 
analysis of the actual procedure involved is, therefore, a prerequisite 
to any conclusion on this subject. 

B. Section 552(b)(1), the ABA Proposal, and Section 553(b)(B) 

It may be argued that Congress has already acted upon the 
belief that it has some authority to prescribe the procedures em- 
ployed in the exercise of all "military and foreign affairs functions," 
including those demanding a special capacity for speedy or confiden- 
tial executive action. When the new freedom-of-information provi- 
sion was added to the APA, Congress did not follow the model of 
section 553 and unqualifiedly exempt all records involving a "mili- 

388. Id. at 480-82. 


tary or foreign affairs function." Instead, in section 552(b)(1), Con- 
gress stated that the freedom-of-information section "does not apply 
to matters that are . . . specifically required by Executive order to be 
kept secret in the interest of national defense or foreign policy." 

This statutory provision may not, however, be used to dem- 
onstrate the existence of any assumed congressional authority to 
impose on the executive branch rule-making procedures for the 
performance of those "military and foreign affairs functions" ex- 
clusively delegated to the President. Ip the first place, the President 
concurred in the freedom-of-information provision. This generally 
applicable provision does not, therefore, demonstrate a congressional 
belief that it may force section 552(b)(1) on the President's exercise 
of any exclusive executive authority over a veto based on constitu- 
tional grounds. Furthermore, it is doubtful that presidential con- 
currence in such a general statute at the time of its enactment would 
later disable the Chief Executive from disavowing it in those par- 
ticular instances where it is seen to trench upon the Executive's 
exclusive power. In such a case the President and Congress only 
agreed to a law that was valid on its face. And the President and 
Congress cannot, either singly or in concert, agree to bind the Presi- 
dent to follow a certain procedure in those particular cases where 
the Constitution delegates to him sole and exclusive authority to 
make a decision and to act upon it as the occasion demands.^^^ 

Secondly, it may be argued that section 552(b)(1) does not, in 
fact, impose any procedure on the Executive in cases of exclusive 
presidential power because the particular procedure imposed is so 
devoid of substance that it is no limitation at all. It is a totally 
empty command to order the Executive to follow certain open 
records requirements for all public documents except those "specifi- 
cally required by Executive order to be kept secret in the interest of 
the national defense or foreign policy," since the only procedure 
required by that provision is that the President must indicate that 
he does not want to follow the usual requirements when he does 
not want to do so — a limitation of doubtful significance or substance. 

389. "The President has on occasions vetoed legislation with such [unconstitutional] 
provisions [in congressional acts infringing on his exclusive powers]; in more recent 
years he has at times approved the legislation but indicated he will treat the pro- 
vision in question as unconstitutional. Attorneys General have supported this ap- 
proach." Wallace, Foreign Aid, supra note 341, at 321-22 n.l91. "[T]he President has 
increasingly indicated in signing messages that he will ignore certain provisions in 
legislation or treat them in such a way as to avoid constitutional problems." Id. at 493. 
See also Ginnane, The Control of Federal Administration by Congressional Resolutions 
and Committees, 66 Harv. L. Rev. 569 (1953); Newman and Keaton, Congress and the 
Faithful Execution of Laws — Should Legislators Supervise Administrators*, 41 Cauf. 
L. Rev. 565 (1953). 


However, this view of the effect of section 552(b)(1) may be 
unduly narrow. If usual public record requirements are to be 
dispensed with, an "Executive order" must be issued, and the mat- 
ters exempted must be done so "specifically." No precise definition 
of "Executive order" is provided in the APA. Common language 
usage and historical practice would suggest, however, that the term 
"Executive order" means that the President must personally issue 
or sign the command for exemption.^^" This constitutes a procedural 
limitation of some substance because it suggests that the final deci- 
sion on this subject cannot be delegated by the President to any 
other official.^^^ 

The term "specifically" may also constitute a procedural limita- 
tion of some substance because it suggests that the President must 
indicate with a fair degree of particularity the precise records affect- 
ing "national defense or foreign policy" that are to be exempted 
from usual public records requirements. He cannot vest unduly broad 
discretion in subordinate officials by issuing an exemptive command 
phrased in vague or overly general terms — leaving it to his sub- 
ordinates to determine in their completely unfettered discretion what 
should and what should not be exempted.^^^ 

There is yet a third reason why section 552(b)(1) does not dem- 
onstrate any congressional belief that it may impose rule-making 
procedures on the executive branch in the performance of those 
"military and foreign affairs functions" exclusively vested therein. 
The freedom-of-information provision, and in particular section 
552(b)(1) thereof, is generally worded and open ended. It may, 
therefore, be applied to all sorts of "national defense and foreign 
policy" matters. The provision is undoubtedly constitutional on its 
face because Congress has the authority to impose procedural re- 
quirements on the Executive in his performance of many "national 

390. The Federal Register, for example, dearly draws this distinction between exec- 
utive orders and other regulations. 

391. Of course, as noted earlier, it is understood that such an "Executive order" 
requirement cannot and will not ensure personal consideration of the merits of each 
order by the President if he is prepared to rely completely on the advice of his 
advisers by automatically signing any order on this subject that they put before him. 

392. But see EPA v. Mink, 41 U.S.L.W. 4201, 4204 (U.S., Jan. 22, 1973); Epstein v. 
Resor, 296 F. Supp. 214 (N.D. Cal. 1969), affd., 421 F.2d 930 (9th Cir.), cert, denied, 
398 U.S. 965 (1970) (Army order, specifying certain files as "Top Secret" under general 
guidelines designated by President, sufficient to exempt those files from freedom-of- 
information provision pursuant to "Executive order" excluding all "Top Secret" 
information from the Act's requirements). They only prove that the "specifically" re- 
quirement will be read in light of the practicalities of any situation to ensure that on 
the one hand, the President is not forced to make an impossible number of indi- 
vidualized judgments, and, on the other hand, that he does not subvert the purpose 
of the requirement of an "Executive order" "specifically" exempting certain documents 
by delegating to subordinates more authority than is reasonably necessary. 


defense and foreign policy" matters. But Congress is presumably 
aware that such a general statute may still be unconstitutional as 
applied to any particular situation in which the Constitution vests 
exclusive authority in the President.^^' The theory would be that 
Congress may in no way control executive conduct, substantively or 
procedurally, when the Executive is exercising a power vested wholly 
or exclusively in his office. A consequence of this argument would 
be that when the President exercises such authority he need not 
adhere to the requirements of section 552(b)(1). He need not exempt 
records from the freedom-of-information provision by "Executive 
order"; nor need he do so "specifically." Indeed, the President or 
his designate may do so very generally, leaving it to subordinates to 
decide in any particular case, without guidelines, whether an ex- 
emption is necessary or desirable. 

On the other hand, even if the requirement that any exemption 
from the freedom-of-information section for matters involving "na- 
tional defense or foreign, policy" be accomplished "specifically" and 
by "Executive order" does constitute a "meaningful" procedural 
limitation on the President, and even if the Congress may not gen- 
erally impose procedural limitations on the Chief Executive when 
he executes powers vested wholly in his office, these particular pro- 

393. It seems clear that under his exclusive constitutional powers, the President 
may assert executive privilege even as against a congressional demand for information. 
"The executive has long asserted the power to withhold documents from Congress in 
the name of executive secrecy, and the Congress has to some extent acknowledged this 
power." Wallace, Foreign Aid, supra note 341, at 321-22 n.l91, citing Bishop, The Exec- 
utive's Right of Privacy: An Unresolved Constitutional Question, 66 Yale L.J. 477 
(1957); Kramer & Marcuse, Executive Privilege— A Study of the Period 1953-1960 (pts. 
1-2), 29 Geo. Wash. L. Rev. 623, 827 (1961); Younger, Congressional Investigations and 
Executive Secrecy: A Study in the Separation of Powers, 20 U. Pitt. L. Rev. 755, 771 
(1959). See also E. Corwin, supra note 361, at 110-16. Consider, too, the following 
statement by Wallace: 

As already noted, executive secrecy may be equally applicable to domestic and 
foreign affairs, but it has been especially asserted with respect to the latter. Section 
624(d)(7) of the Foreign Assistance Act [22 U.S.C. § 2384(d)(7) (1970)] requires the 
delivery of certain documents and information to certain committees of Congress 
or the General Accounting Office. Upon failure to do so, disbursemenu to the 
Inspector General for Foreign Assistance — an official in the State Department — are 
to cease, although the President may "personally" waive this. For fiscal year 1960, 
section 533A(d) of the Mutual Security Act [of 1954, added by the Mutual Security 
Act of 1959, Pub. L. No. 86-108, § 401(h), 73 Stat. 253], a predecessor, did not contain 
this waiver authority .... [The Attorney General said that] the section in question 
was "plainly invalid" and "unconstitutional" [because it did not contain the waiver 
provision]. The Attorney General implied that the involvement of foreign affairs re- 
inforced the President's right [to withhold information]. Senator Robertson, in ex- 
plaining a proposed but unsuccessful amendment to the above statutory provision 
which would have permitted the President to withhold information in certain cir- 
cumstances, stated: "If the President, in keeping with the well-established principle 
under the Constitution of the right of the President to handle foreign policy, 
decides that the disclosure of some phase of foreign policy would be against the 
public interest, he can so certify, and the Congress will not be able to get the 
Wallace, supra, at 475-76, quoting H.R. Rep, No. 818, 87th Cong., 2d Sess. 165 (1961). 
See 41 Op. Atty. Gen. 507 (1960). 


cedural requirements of the freedom-of-informadon provision are 
almost certainly constitutional as applied to such exclusive presi- 
dential powers. The only requirements imposed on the Chief Ex- 
ecutive by section 552(b)(1) are that when he seeks to resist the 
imposition by Congress of any open records requirements on his 
exclusive powers, the President must do so personally and with 
some specificity. Since those exclusive powers are vested only in the 
office of the President, it seems reasonable to require that he per- 
sonally invoke their immunity from any alleged congressional in- 
terference. This is especially so since the confrontation is between 
two coequal branches of the national government; a presumption 
of validity attaches to this congressional action as with any other; 
Congress is closer to the people in a democratic sense than is the 
President; and the line delineating the zone of exclusive presidential 
powers is uncertain and highly debatable at best. 

On the same basis, when the President claims freedom from con- 
gressional interference on the ground that he is exercising power 
vested exclusively in his office, he may reasonably be required to 
indicate "specifically" that for which he claims such freedom. This 
requirement would assure careful consideration by the Chief Exec- 
utive as to the precise scope of the exclusive powers claimed in a 
particular situation and, thereby, minimize the confrontation be- 
tween the two branches. Indeed, given the serious nature of the direct 
confrontation between two coequal branches, one may argue that 
personal action by the President "specifically" indicating the matters 
for which executive privilege is claimed is the only appropriate con- 
stitutional means for invoking the exclusivity of presidential powers 
against the legislature. Of course, the particular requirements of an 
"Executive order" and fair specificity are minimal procedural im- 
positions and will in no way interfere with the President's ability to 
exercise his exclusive powers expeditiously and confidentially. As a 
consequence, the particular procedural requirements embodied in 
section 552(b)(1) may be imposed on the President in the execution 
of his exclusive powers even if such exclusive powers are otherwise 
wholly free from congressional interference substantively or pro- 

As noted, the American Bar Association proposal is to substitute 
for section 553(a)(1) an exemption from the rule-making provision 
couched in the same language as that found in section 552(b)(1). 
Rule-making involving "military or foreign affairs functions" would 
be entirely exempt from section 553 only when it is "specifically 
required by Executive order to be kept secret in the interest of 
national defense or foreign policy." This proposal is obviously con- 


stitutional on its face. It would certainly be constitutional as applied 
to all "military and foreign affairs function" rule-making that is a 
product of authority vested jointly in the President and Congress, 
or solely in Congress. On the basis of previous discussion regarding 
the constitutionality of section 552(b)(1) as applied to powers vested 
wholly in the President, the ABA proposal would probably also be 
constitutional as applied to rule-making derived from such powers. 

As a result, the provision proposed by the ABA probably may 
be made the exclusive means by which executive immunity based 
on a need for secrecy can be properly asserted against normal rule- 
making requirements. What of rule-making involving "military or 
foreign affairs functions" that is a product of authority vested wholly 
in the President for reasons other than a need for secrecy? May 
Congress similarly designate section 553(b)(B) (and section 553(d) 
(3)) as the sole and exclusive means by which executive privilege is 
to be asserted for all other rule-making constitutionally exempt from 
section 553 because it is a product of authority vested wholly in the 
Executive? Or may the Chief Executive completely ignore section 
553(b)(B) when he chooses to avoid usual rule-making procedures 
based on an assertion of such constitutional immunity that is 
grounded on a need, as an example, for speed alone? As noted earlier, 
through a reconstitution of the term "unnecessary," section 553(b) 
(B) could become an effective and desirable formally structured 
means by which executive immunity from usual rule-making pro- 
cedures can be asserted in cases where it is not assertable under the 
proposed ABA provision. 

The findings requirements and publication requirements of 
section 553(b)(B) (and again, section 553(d)(3)) could be constitu- 
tional as applied to "military and foreign affairs function" rule- 
making involving exclusive presidential powers, even though the 
same may not be said of the usual procedures mandated by section 
553(b)-(e). If this is so, it is on the same basis that the requirements 
of section 552(b)(1) were deemed constitutional even as applied to 
matters delegated wholly to the executive branch. Within limits, 
Congress may define the means by which the President must assert 
the exclusiveness of his power against a contrary claim of congres- 
sional authority under a general statute. So long as that definition 
does not impair the President's ability to act as speedily and secretly 
as necessary, or interfere on the merits with the invocation of his 
constitutional immunity, the Executive must employ the congres- 
sionally defined means to assert effectively constitutional privilege 
against a generalized legislative policy. 

In support of this view it should be reiterated that Congress is 


"closer to the people than the President," and its action must be 
presumed constitutional. Furthermore, the requirement of a formal 
finding of executive immunity followed by publication of that con- 
clusion and its justification along with the rules involved is a 
minimal imposition on what otherwise may admittedly be the 
exercise of an exclusive executive power. This minimal imposition 
is also very helpful: the requirement of such a formal and public 
invocation of executive privilege against an imposition by a coequal 
branch of the national government may minimize legislative-ex- 
ecutive conflicts and increase public participation in rule-making by 
inducing careful consideration of the desirability and lawfulness of 
a claim prior to its assertion. It also may minimize or avoid mis- 
understandings because the fact of the claim and its specific nature 
are made clear to all. 

Of course, there may be some disagreement with the above con- 
clusion as to the constitutionality of the ABA proposal and section 
553(b)(B) when applied to those cases involving exclusive executive 
authority. Should the above view be in error, every provision of 
section 553, including the requirements of the proposed ABA provi- 
sion and section 553(b)(B), would be invalid as applied to "military 
and foreign affairs function" rule-making that derives from powers 
vested entirely in the President. The theory would be that all "mili- 
tary and foreign affairs function" rule-making vested wholly in the 
President, for whatever reason, is likely to be immune from every 
sort of congressional regulation, substantive or procedural, including 
efforts by Congress to define the exclusive means by which executive 
immunity may be asserted in such cases. 

C. Conclusion as to Congress' Power 

Previous discussion demonstrates that Congress may impose the 
procedures contained in section 553(b)-(e) on most rule-making in- 
volving "military or foreign affairs functions." Every requirement of 
section 553(b)-(e) would certainly be valid as applied to any "mili- 
tary or foreign affairs function" vested exclusively in Congress, or 
vested concurrently in both Congress and the President. And, of 
course, the President can agree to abide by the procedures desired 
by Congress when he exercises particular "military and foreign 
affairs functions" delegated exclusively to him. The mere existence 
of a general congressional act of this type, meant to apply to all rule- 
making, including that involving these particular functions, may be 
persuasive to the President in this connection. 

Congress has not previously hesitated to enact general, open- 


ended statutes regulating administrative procedure that are valid on 
their face merely because they might be invalid as applied in some 
cases. For example, the freedom-of-information provision of the 
original APA contained no special exemption of any kind for records 
involving "military or foreign affairs functions" as such, even 
though that provision was probably invalid as applied to the exercise 
of those functions delegated wholly to the President. No constitu- 
tional impediment seems, therefore, to stand in the way of a simple 
congressional repeal of section 553(a)(1), which would result in sec- 
tion 553(b)-(e) becoming applicable to all "military and foreign 
affairs function" rule-making. Of course, as noted, the usual rule- 
making procedures contained in section 553(b)-(e) are likely to be 
invalid as applied to those "military or foreign affairs functions" 
vested wholly in the President; but the ABA proposed provision 
and section 553(b)(B) are likely to be found valid as definitions of 
the exclusive means by which the President must assert his constitu- 
tional immunity from usual rule-making procedures when exercising 
powers vested wholly in his office. 

Which of these functions are delegated exclusively to the Presi- 
dent and are therefore otherwise beyond congressional control, and 
which are not, may be resolved on a case-by-case basis. As noted, how- 
ever, those particular "military and foreign affairs functions" whose 
successful performance normally requires a special ability for speedy 
or secret action are more likely than others to be deemed vested 
exclusively in the Executive and beyond congressional authority — 
substantively or procedurally. Most "military or foreign affairs func- 
tions" are, however, not likely to be of this genre. Most authority in 
this area is vested concurrently in both the executive and legislative 
branches, or exclusively in Congress. 

A large part of the rule-making undertaken by the executive 
branch that clearly or colorably may involve "military or foreign 
affairs functions" should be and may be subjected by Congress to 
usual rule-making procedures. Presidential authority over passports, 
for example, is certainly concurrent with that of Congress. Zemel 
V. Rusk^^^ held that the Passport Act of 1926^^*^ embodied a grant of 
authority to the Executive to impose area restrictions on the right to 
travel. Implicit in the case is the notion that Congress could, if it 
desired, prohibit the imposition of any such area restrictions on the 
issuance of passports. By analogy, is there any doubt that Congress 
could require most or all rule-making involving passports to adhere 

894. 381 U.S. 1 (1965). 

595. 22 U.S.C. § 211a (1970). 


to the section 553 procedures? At present, relying on the unqualified 
exemptions of section 553(a)(1), the State Department totally ignores 
usual rule-making procedures when it makes policy relating to pass- 
ports. Similarly, Congress and the President have, in most cases, 
concurrent authority over the acquisition, use, and disposal of mili- 
tary property.^^^ The times, circumstances, and conditions under 
which the public may use such military property, acquire such mili- 
tary property, or sell property to the armed forces, may, therefore, 
be subjected by Congress to usual rule-making procedures. Yet, the 
Department of Defense almost always ignores section 553 when it 
makes such rules on the basis of the unqualified exemption found in 
section 553(a)(1). The Constitution certainly does not compel these 
results save in a small number of narrowly circumscribed situations. 

VIII. Conclusion 

In 1970 the American Bar Association adopted a resolution to 
the effect that the APA should be improved by 

[bjroadening the coverage of provisions for notice and opportunity 
for public participation in rule-making where formal procedures 
are not required by limiting, in appropriate instances, exemptions 
now included in the Administrative Procedure Act so far as it may 
be done without occasioning delay or expense disproportionate to 
the public interest.^^'^ 

The resolution was not Utopian; it realistically called for the limita- 
tion or suspension of current exemptions from section 553 only 
where "it may be done without occasioning delay or expense dis- 
proportionate to the public interest." 

Another critic of section 553(a)(1) has recently noted that 

[i]n this era when the biggest undertaking of the federal government 
is military, and when the biggest department of government is De- 
fense, there is reason to believe that democratic procedures [of the 
kind provided for in section 553] should more than ever be insisted 
upon in all rulemaking or policy making [involving military func- 
tions] that does not have to be kept secret — namely, most of it.^^s 

The same is true of rule-making involving "foreign affairs functions." 
The need for democratic procedures of the kind found in section 
553 is also especially great with regard to that sort of rule-making 
because the effects of this nation's foreign affairs so dominate our 

396. In regard to Congress' authority, see U.S. Const, art. IV, § 3. 

397. Comment, Current ABA Proposals for Amendment of the Administrative Pro- 
cedure Act, 23 Ad. L. Rev. 67, 72-73 (1970). 

398. R. LoRCH, Democratic Process and Administrative Law 104 (1969). 


whole society today, including the direction in which it moves in- 
ternally, that we all have a very large stake in rule-making involving 
that subject. The United States Senate Committee on the Judiciary 
has thus concluded that 

the Military Establishment is so large and its reach so universal, and 
the rights of private citizens that its actions affect so numerous, that 
a general exception of its rulemaking from any procedure require- 
ments can no longer be justified. The same observation can be made 
to a large degree with respect to the exercise of what the present act 
described as foreign affairs functions — by the Department of State, 
by the Treasury and by other agencies of the Federal Government 
having such functions.^s^ 

The Senate Committee is undoubtedly correct. 

The reasons advanced to justify the current exemption from 
section 553 for all rule-making involving a "military or foreign 
affairs function" are insufficient. At most, those justifications dictate 
the need for a more narrowly tailored exemption from usual rule- 
making proceedings than is currently found in section 553(a)(1). The 
existing "impracticable, unnecessary, or contrary to the public in- 
terest" provision found in section 553(b)(B) and the "good cause" 
exemption found in section 553(d)(3) provide such an exclusion 
from the requirements of section 553(b)-(d). They would work an 
adequate accommodation of the competing interests involved, care- 
fully balancing the need for public participation against the need for 
effective, efficient, expeditious, and inexpensive government admin- 
istration. And an exemption from the right to petition conferred by 
section 553(e) seems no more necessary or justifiable for subsection 
(a)(1) rule-making than for rule-making already covered by section 
553. When a special need for secrecy appears in cases of rule-making 
involving a "military or foreign affairs function," it can adequately 
be handled by section 552(b)(1). If this is not sufficient, the language 
of section 552(b)(1) can be expressly carried over and incorporated 
into section 553. That is the ABA proposal. It seems wise because 
it will reassure the agencies involved that their legitimate needs for 
secrecy will in no way be interfered with by the repeal of section 

The solution proposed here to the difficulties arising from the 
repeal of section 553(a)(1) is bound to put some additional burden 
on the agencies that will have to implement it. But the burden in- 
volved is not likely to be very large — especially in light of the avail- 
ability of narrowly tailored class exemptions — and that burden would 

399. S. Rep. No. 1234. 89th Cong., 2d Sess. 11 (1966) (a report on S. 1336 amending 
the Administrative Procedure Act). 


seem clearly outweighed by the benefits obtained from the repeal 
of section 553(a)(1) because it will guarantee increased public par- 
ticipation in rule-making of the kinds currently excluded from usual 
procedures by that provision. 

The proposal made in this study would only affect the section 
553(a)(1) exemptions for rule-making involving "military or foreign 
affairs functions." It would not affect, in any way, the existing section 
553(a)(2) exemption for rule-making relating to "agency manage- 
ment or personnel." Similarly undisturbed would be the exemption 
from section 553(b)-(d) of all "interpretative rules" and "general 
statements of policy" found in section 553(b)(A) and section 553 
(d)(2). When combined with section 553(b)(B) and the "good cause" 
exemption found in section 553(d)(3), the above exemptions should 
provide adequate leeway for agencies to meet their responsibilities 

Several desirable consequences would flow from repeal of section 
553(a)(1). It would eliminate an unqualified exemption that is 
susceptible to wide application and misapplication, which may defeat 
the policy of public participation in rule-making. Repeal would also 
make more effective the previously proposed elimination of the 
section 553(a)(2) exemption for rules relating to "public property, 
loans, grants, benefits, or contracts." Even after the elimination of 
these exclusions, rules relating to those subjects that also involve 
"military or foreign affairs functions" will be free from usual rule- 
making requirements under section 553(a)(1). Repeal of the former 
exemption accompanied by repeal of subsection (a)(1) would close 
this gap. It would assure that all rules relating to "public property, 
loans, grants, benefits, or contracts" will clearly, and without ques- 
tion, be subject to the requirements of section 553, and that they will 
be excused from those requirements only where particular justifica- 
tions under more narrowly tailored exemptions dictate that result. 

On a practical level, elimination of section 553(a)(1) would mean 
that most substantive**"' rules involving the acquisition and disposal 
of all sorts of military property would clearly be subject to usual 
advance notice and public participation requirements. This includes 
substantive rules describing the terms and conditions of such acquisi- 
tion or disposal and the particular circumstances under which it shall 
take place. Most rules determining whether, and under what condi- 
tions, the public may utilize the property, facilities, and services of 

400. The exemption for "rules of agency organization, procedure, or practice" 
found in 5 U.S.C. § 553(b)(A) (1970) should not be forgotten. It is dubious, however, 
whether that exemption deserves to be continued. 


the armed forces would also be clearly subject to usual advance notice 
and public participation requirements. The same may be said of 
most substantive rules involving the terms and conditions upon 
which persons may join the armed forces or receive loans, grants, 
benefits, or contracts from the armed forces. Repeal of this exemp- 
tion would also mean that usual procedures will have to be followed 
in the making of substantive regulations governing such things as the 
conduct of ROTC programs, the issuance of passports and visas, 
and the administration of the immigration laws and foreign exchange 
programs. Rules issued to control imports or exports or otherwise 
involving foreign trade would also clearly be subjected to usual 
procedural requirements in most cases. The same may be said for 
most rules implementing the regulation of American seamen and 
ships abroad and the regulation of American business abroad. Rule- 
making implementing foreign aid programs would also be clearly 
subjected to advance notice and public participation requirements 
in most cases. The above examples are only illustrative. 

A discouraging discovery made in the course of preparing this 
Article is that a number of agencies opposing modification of section 
553(a)(1) have apparently not re-examined their position seriously 
during the past few years. Statements opposing repeal of these exemp- 
tions that were prepared as long as five or ten years ago are still used 
by some agencies as the principal basis for articulating their position. 
The language of a few such statements has sometimes not even been 
modified to reflect subsequent changes in the law, or obvious changes 
in circumstances, when they were issued in light of a new inquiry 
on this subject. It is hoped that this re-examination of the exemption 
can at least provoke these agencies into conducting a careful re- 
consideration of their position on this question. That reconsideration 
should result in a realization that repeal of the exemption for rule- 
making involving "military or foreign affairs functions" need not 
seriously disadvantage them, in light of existing exemptions con- 
tained in other portions of section 553. The national interest must 
not be compromised. Repeal of section 553(a)(1) will not do so. The 
danger is that the mere involvement of "military and foreign affairs 
functions" will make the matter so politically sensitive that it will 
not be able to receive a fair hearing on the merits by the Congress 
or the agencies that make such rules. It is to be hoped that this will 
not occur. 


(As published in: Columbia Law Review, Vol. 72, No. 6 (Oct. 1972)),